October 1, 2007, through March 31, 2008

U.S. Department of Housing and Urban Development

Office of Inspector General

Semiannual Report

to Congress
Profile of Performance

Audit profile of performance

for the period, October 1, 2007, through March 31, 2008

Results

Recommendations that funds be put to better use $1,221,819,100

Recommended questioned costs $143,781,895

Collections from audits $21,752,264

Administrative sanctions 6

Investigation profile of performance

for the period, October 1, 2007, through March 31, 2008

Results

Funds put to better use $30,556,203

Recoveries/receivables $20,560,935

Indictments/informations 602

Convictions/pleas/pretrial diversions 444

Civil actions 26

Administrative sanctions1 422

Personnel actions 26

Arrests2 754

Search warrants 97

Subpoenas issued 413

Hotline profile of performance

for the period, October 1, 2007, through March 31, 2008

Results

Funds put to better use $2,356,668

Recoveries/receivables $131,080

1

 Personnel actions include reprimands, suspensions, demotions, or terminations of the employees of Federal, State, or local

governments, or of Federal contractors and grantees, as the result of Office of Inspector General (OIG) activities. In addition,

this reporting category includes actions by Federal agencies to suspend, debar, or exclude parties from contracts, grants, loans,

and other forms of financial or nonfinancial transactions with the government, based on findings produced by OIG.

2

 Included in the arrests is our focus on the nationwide Fugitive Felon Initiative.
             

             

iii

Inspector General’s Message

Inspector General’s Message

I am pleased to present the U.S. Department of Housing and

Urban Development, Office of Inspector General (HUD OIG),

Semiannual Report to the Congress for the first half of fiscal year 2008.

Once again, HUD OIG employees–auditors, agents, attorneys, and

support staff–have excelled in their oversight, audit, and investigative

endeavors.

This is my twelfth report on HUD OIG ’s extraordinary

activities, and our efforts continue to improve in both their reach and

effectiveness. During the reporting period, we had $1.25 billion in

funds put to better use, questioned costs of $143 million, and $20

million in recoveries and receivables. This is exceptional work by our

staff that has resulted in significant positive impact on fraud and

misuse of taxpayer dollars. I am so proud of the men and women of

HUD OIG and their achievements.

The Federal Housing Administration (FHA) continues to provide an essential product for the

American homebuyer and is a recognized force for economic stability in uncertain times. However, of

particular concern at this time, is the impact of the subprime mortgage situation on the overall health of

FHA. We have applied our investigative and audit resources to this issue. We have audited at-risk mortgagees,

and we have stepped up our participation in mortgage fraud task forces around the country. We want

to acknowledge FHA for its cooperation in these efforts.

I direct your attention to our high profile audits and investigations. Audits to uncover single-family

lenders and loan origination abuses were a particular priority during this period. Lenders were selected for

audit through the careful analysis of data and various risk factors.

HUD OIG also focused on HUD’s controls over the FHA appraiser roster to determine whether they

were adequate to ensure that only qualified and eligible appraisers were placed on the roster and whether

the oversight and maintenance of the roster were sufficient to ensure that only currently eligible appraisers

remained on it. Oversight was lacking or faulty, and we recommended stronger internal controls.

Our Office of Investigation also continued its pursuit of fraud among buyers and lenders. Special

attention was paid to loan origination fraud, identity fraud, false Social Security numbers, and/or bankruptcy

fraud.

A good example of this work is the case against a former underwriter for First National Funding

Company, who was sentenced in U.S. District Court, Newark, NJ, for making false statements to HUD

and aiding and abetting. This person was also debarred from HUD and throughout the Executive Branch

of the Federal Government for 3 years. At issue was the defendant’s falsifying of employment

verification documents used by unqualified borrowers to obtain FHA-insured mortgages, as a result of

which, HUD paid out in excess of $9.8 million after 66 mortgages defaulted.
             

             

iv Inspector General’s Message

HUD OIG is dedicated and committed to becoming a more efficient and effective organization,

to better recover taxpayer funds and bring those to justice who perpetrate crimes against the citizens and

Government of this country.

I thank the staff of HUD OIG for their tireless work in their efforts to identify waste, fraud, and abuse

in the Nation’s housing and urban development programs, and I look forward to leading them to greater

and higher accomplishments in the future.

Kenneth M. Donohue

Inspector General
             

             

Audit Charts v

Audit reports issued by program

Public and Indian

Housing

39%

Multifamily

Housing

12%

Community

Planning and

Development

27%

Hurricane

Relief Oversight

8%

Other

programs

9%

Single-Family

Housing

5%

Monetary benefits identified by program

Public and Indian

Housing

25%

Multifamily

Housing

1%

Community

Planning and

Development

5%

Hurricane

Relief Oversight

1%

Other

programs

68%

Single-Family

Housing

0%

Monetary benefits identified in millions of dollars

$1,000

$900

$800

$700

$600

$500

$400

$300

$200

$100

$0

$1.2 $11.3

$348.1

$66.2 $16.5

$922.3

Single-Family

Housing

Multifamily

Housing

Public &

Indian

Housing

Community

Planning &

Development

Hurricane

Relief

Oversight

Other

programs
             

             

vi Investigation Charts

Investigative cases opened by program area (total: 635)

Public and Indian

Housing

50% (318)

Single-Family

Housing

13% (83)

Multifamily

Housing

10% (62)

Community

Planning and

Development

20% (128)

Other

programs

7% (44)

Investigative recoveries by program area (total: $20,560,935)

Single-Family

Housing

38%

($7,878,888)

Other

1% ($168,000)

Multifamily

Housing

5% ($1,001,098)

Public and Indian

Housing

28% ($5,767,747)

Community Planning

and Development

28% ($5,745,202)
             

             

Acronyms List vii

Acronyms List

AIGA Assistant Inspector General for Audit

AIGI Assistant Inspector General for Investigations

ARIGA Assistant Regional Inspector General for Audit

ASAC Assistant Special Agent in Charge

ATFE Bureau of Alcohol, Tobacco, Firearms, and Explosives

CAS Computer Audit Specialist

CDBG Community Development Block Grants

CID Criminal Investigation Division

CPD Office of Community Planning and Development

DAIGA Deputy Assistant Inspector General for Audit

DAIGI Deputy Assistant Inspector General for Investigation

DEA Drug Enforcement Administration

DHAP Disaster Housing Assistance Program

DHS Department of Homeland Security

DIG Deputy Inspector General

DoD Department of Defense

DOE Department of Education

DOJ U.S. Department of Justice

DROD Disaster Relief Oversight Division

DUI Driving under the influence

DVP Disaster Voucher Program

EIV Enterprise Income Verification

FBI Federal Bureau of Investigation

FDIC Federal Deposit Insurance Corporation

FEMA Federal Emergency Management Agency

FFMIA Financial Management Improvement Act of 1996

FHA Federal Housing Administration

FIRMS Facilities Integrated Resources Management System

FISMA Federal Information Security Management Act of 2002

FY Fiscal year

GAO Government Accountability Office

GNND Good Neighbor Next Door

HHS U.S. Department of Health and Human Services

HOME Home Ownership Made Easy
             

             

viii

HOPWA Housing Opportunities for Persons with AIDS

HUD U.S. Department of Housing and Urban Development

ICE Immigration and Customs Enforcement

IG Inspector General

IRS Internal Revenue Service

KDHAP Katrina Disaster Housing Assistance Program

MAP Multifamily Accelerated Processing

MTW Moving to Work

NAHASDA Native American Housing Assistance and Self Determination Act of 1996

NAHRO National Association of Housing and Redevelopment Officials

OA Office of Audit

OI Office of Investigation

OIG Office of Inspector General

OMB Office of Management and Budget

OTND Officer/Teacher Next Door

PCIE/ECIE President’s Council on Integrity and Efficiency/Executive Council on Integrity and Efficiency

PFCRA Program Fraud Civil Remedies Act

PHA Public housing agency

PHSI Public housing safety initiatives

PIH Office of Public and Indian Housing

REO Real estate owned

RHIIP Rental Housing Integrity Improvement Project

RIGA Regional Inspector General for Audit

SA Special Agent

SAC Special Agent in Charge

SBA Small Business Administration

SFA Supervisory Forensic Auditor

SSA Social Security Administration

SSN Social Security number

TSA Transportation Security Administration

USAO U.S. Attorney’s Office

USDA U.S. Department of Agriculture

USMS U.S. Marshals Service

USPS U.S. Postal Service

USPIS U.S. Postal Inspection Service

VA U.S. Department of Veterans Affairs

Acronyms List
             

             

Table of Contents ix

Table of Contents

Executive Highlights 1

Chapter 1 - HUD’s Single Family Housing Programs 7

Audits 8

Inspections and Evaluations 11

Investigations 12

Chapter 2 - HUD’s Public and Indian Housing Programs 21

Audits 22

Investigations 34

Chapter 3 - HUD’s Multifamily Housing Programs 57

Audits 58

Investigations 63

Chapter 4 - HUD’s Community Planning and Development Programs 69

Audits 70

Inspections and Evaluations 78

Investigations 79

Chapter 5 - Hurricane Relief Oversight 87

Introduction and Background 89

Audits 93

Investigations 97

Inspections and Evaluations 106

Chapter 6 - Other Significant Audits and Investigations/OIG Hotline 107

Audits 108

Investigations 111

OIG Hotline 112

Chapter 7 - Outreach Efforts 115

Chapter 8 - Review of Policy Directives 127

Proposed Legislation 128

FHA Modernization 128

Proposed Rules 128

Chapter 9 - Audit Resolution 129

Audit Reports Issued before Start of Period with No Management Decision 130

Significantly Revised Management Decisions 131

Significant Management Decision with Which OIG Disagrees 132

Federal Financial Management Improvement Act of 1996 133

Appendix 1 - Audit Reports Issued 135

Appendix 2 - Tables 143

Appendix 3 - Index 163

HUD OIG Operations Telephone Listing 167
             

              x

Reporting Requirements

The specific reporting requirements as prescribed by the Inspector General Act of 1978, as amended by the

Inspector General Act of 1988, are listed below:

Source/Requirement Pages

Section 4(a)(2)-review of existing and proposed legislation and regulations. 128

Section 5(a)(1)-description of significant problems, abuses, and deficiencies relating to 1-113, 128

the administration of programs and operations of the Department.

Section 5(a)(2)-description of recommendations for corrective action with respect to 7-113

significant problems, abuses, and deficiencies.

Section 5(a)(3)-identification of each significant recommendation described in Appendix 2, Table B

previous semiannual report on which corrective action has not been completed.

Section 5(a)(4)-summary of matters referred to prosecutive authorities and the 7-113

prosecutions and convictions that have resulted.

Section 5(a)(5)-summary of reports made on instances in which information or No Instances

assistance was unreasonably refused or not provided, as required by Section 6(b)(2) of

the Act.

Section 5(a)(6)-listing of each audit report completed during the reporting period and Appendix 1

for each report, where applicable, the total dollar value of questioned and unsupported

costsand the dollar value of recommendations that funds be put to better use.

Section 5(a)(7)-summary of each particularly significant report and the total dollar value 7-113

of questioned and unsupported costs.

Section 5(a)(8)-statistical tables showing the total number of audit reports and the Appendix 2, Table C

total dollar value of questioned and unsupported costs.

Section 5(a)(9)-statistical tables showing the total number of audit reports Appendix 2, Table D

and the dollar value of recommendations that funds be put to better use by

management.

Section 5(a)(10)-summary of each audit report issued before the commencement Appendix 2, Table A

of the reporting period for which no management decision had been made by the

end of the period.

Section 5(a)(11)-a description and explanation of the reasons for any No Instances

significant revised management decisions made during the reporting period.

Section 5(a)(12)-information concerning any significant management decision with which the 132

Inspector General is in disagreement.

Section 5(a)(13)-the information described under section 05(b) of the Federal Financial 133

Federal Financial Management Improvement Act of 1996.

Reporting Requirements
               

               

Executive

Highlights
             

             

2 Executive Highlights

Strategic Initiative 1

HUD Strategic Goal: Increase Homeownership Opportunities

OIG Strategy: Contribute to the reduction of fraud in single-family insurance programs

through

- Audits uncovering single-family and loan origination abuse

- Audits of the U.S. Department of Housing and Urban Development's (HUD) internal policies to

 determine whether controls are adequate

- National strategy for single-family mortgage fraud task forces

- Inspections and evaluations of program areas

- Outreach to industry and consumer groups and the Department

Highlights: Results or impact of significant OIG work

- Recommended HUD develop and implement procedures to uniformly resolve underwriting page 9

 underwriting deficiencies and potentially fraudulent loans

- Evaluation of the Federal Housing Administration (FHA) Preforeclosure Sales Program page 11

 in Region III

- Seven indicted for loan origination scam causing more than $3.9 million in HUD losses page 13

- Appraiser sentenced to prison - HUD losses exceed $2.7 million page 13

- Program Fraud Civil Remedies Act (PFCRA) settlements in New Jersey net more page 14

 than $200,000

- Identity theft and false Social Security numbers cause HUD losses in excess of $5.2 million page 16

 in Colorado and Illinois

- Reported as a material weakness FHA's lack of system capacity to manage anticipated page 108

 increased volume for the Home Equity Conversion Mortgage System

- More than 550 mortgage and real estate professionals attend mortgage fraud presentation page 118

 in Texas

- Provided comments for HUD to tighten controls and risk over FHA Secure program page 128

 which is intended to assist subprime or high-risk borrowers harmed by questionable

 loan terms

- Provided nonconcurring comments on HUD's notice for preforeclosure sales which page 128

 could impact the liquidity of the FHA insurance fund

Emerging Issues: Areas of OIG interest

- Challenges resulting from an increase in FHA-insured home equity conversion mortgages

 (also known as "reverse mortgages")

- Risk-based premium pricing and FHA refinancing of subprime loans (FHA Secure)

- Gulf Coast States homeowner's assistance programs

- Downpayment assistance: seller-funded downpayments

- Risk involved in zero downpayment
             

             

Executive Highlights 3

Strategic Initiative 2

HUD Strategic Goal: Promote Decent Affordable Housing

OIG Strategy: Contribute to the reduction of erroneous payments in rental assistance

programs through

- Audits of Section 8 Housing Choice Voucher program activities

- Audits of HUD’s internal policies to determine whether controls are adequate

- Investigative initiatives involving corruption in the management of troubled public housing authorities

 and multifamily developments

- Section 8 fraud initiatives in each Office of Inspector General (OIG) region

- Public Housing Fugitive Felon and Sex Offender Initiatives - locate and remove

- Public and Department-wide outreach initiatives

Highlights: Results or impact of significant OIG work

- Recommended the Director of the Fort Worth Office of Public and Indian Housing page 23

 require the Authority to support or repay more than $32.4 million, void and properly

 reclassify $648,530 in outstanding checks, and implement effective internal controls

 over the financial operations of its voucher program

- Recommend HUD improve its controls to ensure that housing authorities properly page 23

 administer the community service and self-sufficiency requirement, resulting in more

 than $257 million being put to better use annually

- Identified excessive assistance payments due to payments for units not meeting page 27

 minimum housing quality standards (HQS), errors in tenant files, and lack of controls

- Recommended housing authorities properly account for and utilize income-eligible pages 33

 Federal activities

- More than $800,000 in Harrisburg housing funds diverted to failing credit union page 35

- Tampa housing counselors steal more than $450,000 in housing subsidies page 35

- HUD's Enterprise Income Verification (EIV) system discovers local government employees page 39

 fleecing the Miami-Dade Housing Authority

- Sex offenders found in Atlanta public housing units page 54

- Fake tenants and equity skimming cause HUD about $7.4 million in losses page 64

- Public housing fraud schemes described for 140 National Association of Housing and page 119

 Redevelopment Officials in New Jersey, Connecticut, Nebraska, and Nevada

Emerging Issues: Areas of OIG interest

- Adequacy of HQS inspections

- Implementation of Section 8 Management Assessment Program controls to ensure that HUD's

 Section 8 housing stock is in material compliance with HQS

- FHA-insured nursing homes and nursing home equity skimming

- Public housing corruption and multifamily mismanagement

- Evaluation of the Housing Authority of New Orleans (HANO) in carrying out its public housing

 activities, Section 8, procurement, and financial functions
             

             

4 Executive Highlights

Strategic Initiative 3

HUD Strategic Goal: Strengthen Communities

OIG Strategy:

- Promote integrity, efficiency, and effectiveness of programs

- Contribute to the reduction of fraud, waste, and abuse through

- Audits of the Community Development Block Grant (CDBG), Supportive Housing Program,

 and HOME Investment Partnerships (HOME) program

- Department liaison- Audits of Gulf Coast activities

- Investigative initiative involving corruption in the administration of State or local community

 planning and development programs in each OIG region

- Hurricane relief fraud in HUD CDBG-funded programs

- Inspections and evaluations of program areas

- Public dissemination of HUD OIG activities and outreach activities with State and local government

 agencies

Highlights: Results or impact of significant OIG work

- Recommended grantees reimburse the CDBG program and provide supporting page 72

 documentation for unsupported expenditures

- Inspection of the State monitoring efforts of local governments receiving CDBG program page 78

 funds

- A former nonprofit executive director in Gary, IL, sent to prison for embezzling HUD page 80

 HOME funds

- Crotched Mountain Foundation payroll supervisor embezzles more than $1.6 million in HUD page 80

 CDBG and other funding

- Jury convicts Love Social Services Center treasurer and wife pleas guilty to stealing HUD page 80

 Community Planning and Development and U.S. Department of Justice (DOJ) funds

- Mayor of Brookshire, TX, indicted for taking bribes from contractor in exchange for page 83

 CDBG-funded contracts

- Hurricane relief fraud involving CDBG funding page 98

- About 300 HUD grantees and community development representatives briefed on page 121

 HUD OIG's mission and authority in San Francisco, CA

Emerging Issues: Areas of OIG interest

- Gulf Coast CDBG supplemental hurricane funding fraud
             

             

Executive Highlights 5

Strategic Initiative 4

HUD Strategic Goal: Embrace High Standards of Ethics, Management, and

Accountability

OIG Strategy:

- Be a relevant and problem-solving advisor to the Department

- Contribute to improving HUD's execution and accountability of fiscal responsibilities

 through

- Audits of HUD's financial statements

- Audits of HUD's information systems and security management

- Audits of Ginnie Mae activities

- Implementation of DOJ Procurement Fraud Task Force at HUD

- FedRent data match operation - identifying Federal employees who fraudulently receive housing

 assistance

Highlights: Results or impact of significant OIG work

- Federal employees who cheat the system (FedRent) page 51

- Recommended HUD revise Section 8 project-based recapture methodology to include page 108

 recapturing funds from expired Section 8 contracts occurring in the current fiscal year

 with potential funds put to better use of $580 million from these expired contracts

- Identified $342.3 million in excess unexpended funds that could be deobligated and page 108

 put to better use

- Identified two material weaknesses in internal controls related to FHA's home equity page 108

 conversion mortgage (HECM) systems and credit subsidy cash flow model

- Issued unqualified audit opinions of HUD's consolidated, FHA, and Ginnie Mae pages 108, 109

 fiscal years 2006 and 2007 financial statements

- Recommended HUD properly meet its information security responsibilities page 109

Emerging Issues: Areas of OIG interest

- HUD’s information technology capacity

- Ginnie Mae’s monitoring of issuers
Acronyms List

               

               

Chapter 1

HUD’s Single-Family

Housing Programs
             

             

8

The Federal Housing Administration’s (FHA) single-family programs provide mortgage insurance to

mortgage lenders that, in turn, provides financing to enable individuals and families to purchase,

rehabilitate, and construct a home. In addition to the audits and investigations described in this chapter,

the U.S. Department of Housing and Urban Development, Office of Inspector General (HUD OIG),

has conducted numerous outreach efforts (see chapter 7, page 116).

Audits

Strategic Initiative 1: Contribute to the reduction of fraud

in single-family insurance programs

Chart 1.1: Percentage of OIG single-family housing audit reports

during this reporting period

Chapter 1: HUD’s Single-Family Housing Programs

* This does not include hurricane relief audits. See chapter 5 for these reviews.

Region 1

0%

Region 3

34%

Region 2

0%

Region 4

0%

Region 11

(Disaster Relief Oversight)

%(N/A)*

Region 5

0%

Region 6

0%

Region 7-8

33%

Region 9-10

33%

Key program results Questioned costs Funds put to better use

Audit 3 audits $234,000 $780,000

Our

focus

Page 9

Page 9

Page 9

- HUD’s FHA appraiser roster

- HUD's Quality Assurance Division

- Mortgagees, loan correspondents, and direct endorsement lenders
             

             

Chapter 1: HUD’s Single-Family Housing Programs 9

HUD's FHA Appraiser Roster

HUD OIG audited HUD's controls over the FHA appraiser roster to determine whether they were

adequate to ensure that only qualified/eligible appraisers were placed on the roster and whether the oversight

and maintenance of the roster were sufficient to ensure that only currently eligible appraisers remained on the

roster.

HUD did not conduct roster quality control reviews in accordance with its written roster quality control

plan, perform regular monitoring of the roster to ensure data reliability, and retain initial application packages

for all active appraisers listed on its roster as required by HUD's record disposition schedule. It also instructed

and/or approved its contractor to use logic statements when developing the software program that updates the

roster, which were not in accordance with HUD regulations and did not always work properly. As a result, the

roster contained unreliable data including the listing of 3,480 appraisers with expired licenses and 119

appraisers that had been State sanctioned. Additionally, 28 of the appraisers listed with expired licenses and

eight of the sanctioned appraisers conducted appraisals.

OIG recommended that HUD implement stronger internal controls to ensure that only eligible appraisers

are placed on its roster and that oversight and maintenance of the roster are sufficient to ensure that only

eligible appraisers remain on the roster. (Audit Report: 2008-LA-0002)

HUD's Quality Assurance Division

HUD OIG audited the HUD Quality Assurance Division, Washington, DC, to determine whether it

consistently required Federal Housing Administration (FHA)-approved lenders to indemnify loans with

similar material deficiencies and whether it appropriately handled potentially fraudulent loans.

HUD's Quality Assurance Division did not always resolve materially deficient or potentially fraudulent

loans consistently. As a result, HUD increased its risk of treating lenders differently in similar situations. In

addition, OIG did not have the opportunity to pursue actions against parties responsible for fraudulent loans,

and the FHA insurance fund incurred unnecessary losses and remains at risk for additional losses on fraudulent

loans.

OIG recommended that HUD (1) develop and implement effective policies and procedures to ensure

uniform resolutions to loan underwriting deficiencies and the handling of potentially fraudulent loans,

(2) coordinate with OIG to reevaluate the agreement between HUD and OIG regarding referring potentially

fraudulent loans to OIG, and (3) require lenders to indemnify 16 insured loans that contained evidence of

fraud. (Audit Report: 2008-KC-0001)

Mortgagees, Loan Correspondents, and Direct Endorsement Lenders

HUD OIG audited the Plymouth Meeting branch of National City Mortgage, Plymouth Meeting, PA, to

determine whether the branch office complied with HUD regulations, procedures, and instructions in the

origination and quality control review of FHA loans.

Although the branch office generally complied with HUD regulations, procedures, and instructions,

for two of eight loans reviewed, it did not properly document borrowers' qualifying ratios and did not properly
             

             

10

verify assets for the loans, originally valued at more than $181,000, thereby increasing the risk to the FHA

insurance fund. The branch office also charged ineligible commitment fees and/or overcharged for credit

reports for six loans, thus causing borrowers to incur unnecessary costs.

OIG recommended that HUD require National City Mortgage to indemnify more than $198,000 for two

loans that it issued contrary to HUD's loan origination requirements; reimburse borrowers nearly $900 in

overcharges; and emphasize its policies, procedures, and controls to branch office staff to ensure that the

underwriters consistently follow HUD's underwriting requirements. (Audit Report: 2008-PH-1002)



Chapter 1: HUD’s Single-Family Housing Programs
             

             

Chapter 1: HUD’s Single-Family Housing Programs 11

Inspections and Evaluations

Evaluation of the FHA Preforeclosure Sales Program in Region III

A preforeclosure or "short" sale involves a delinquent FHA-insured property sale at fair market value but

for less than the mortgage indebtedness. The lender accepts the net sales proceeds to satisfy the defaulted

mortgage debt and can submit a claim to HUD for the difference plus certain costs, expenses, and debenture

interest. An evaluation of the FHA preforeclosure sales program in Region III was initiated to determine

whether lenders complied with FHA program requirements and whether these procedures limited the risk of

program fraud and abuse.

The evaluation of the FHA preforeclosure sales program in Region III found that lenders technically

complied with most FHA requirements in administering the program, but FHA program guidelines were

inadequate to ensure that homes approved for preforeclosure sales were sold at fair market or optimum value.

As a result, HUD may incur higher insurance claims on some properties sold throught his loss mitigation

program, and the program remains inherently vulnerable to investor exploitation and fraud schemes. HUD

OIG provided HUD with this report as a management advisory without formal recommendations.

(I&E Report: IED 07 007)


             

             

12 Chapter 1: HUD’s Single-Family Housing Programs

Investigation

Some investigations discussed in this report were generated from leads provided by HUD single-family

housing program staff or conducted jointly with Federal, State, and local law enforcement agencies. The

results of various significant investigations are described below.

Strategic Initiative 1: Contribute to the reduction of fraud

in single-family insurance programs

Chart 1.2: Percentage of OIG single-family housing closed investigation cases

during this reporting period

$

recovered

Admin/civil

actions

Investigations 99 $7.9 million 53

Our

focus

Page 13

Page 16

Page 17

Page 18

- Loan origination fraud

- Identity fraud and false Social Security number

- Bankruptcy fraud

- Other single-family fraud

Convictions/pleas/

pretrials

Cases

closed

Key program

results

62

* This does not include hurricane relief cases. See chapter 5 for these cases.

Region 1

3%

Region 3

18%

Region 2

14%

Region 4

6%

Region 11

(Disaster Relief Oversight)

%(N/A)*

Region 5

14%

Region 6

11%

Region 7-8

13%

Region 9-10

22%
             

             

13

Loan Origination Fraud

JeVenna Smith-Harris, a former underwriter for First National Funding Company, previously sentenced in

U.S. District Court, Newark, NJ, for her guilty plea to making false statements to HUD and aiding and

abetting, was debarred from procurement and nonprocurement transactions with HUD and throughout the

Executive Branch of the Federal Government for 3 years. Smith-Harris falsified employment verification

documents used by unqualified borrowers to obtain FHA-insured mortgages. HUD realized losses in excess of

$9.8 million after 66 mortgages defaulted.



Darrell and Kandace Marriott, owners of One Way Home and Land

Company, Inc. (One Way); Karen Hayes, Debra Grace, Linda Howard, and Brett

Harwell, employees of One Way; and Gary Griffith, a loan officer for Guardian

Nationwide Mortgage, were each indicted in Navarro County Court, Corsicana,

TX, for engaging in an organized crime and securing execution of a document by

deception. The above defendants allegedly created, provided, or certified

fraudulent financial, identity, and other documents used by unqualified borrowers

to obtain FHA-insured mortgages. HUD realized losses in excess of $3.9 million

after 66 mortgages defaulted.



Kahala Hickoff, a HUD-approved appraiser, was sentenced in U.S. District

Court, Los Angeles, CA, to 6 months incarceration and 3 years probation and

ordered to pay HUD $905,970 in restitution for his earlier guilty plea to making

false statements. Hickoff prepared fraudulent appraisals for FHA-insured

properties and used the names of others when he signed and submitted the

documents. HUD realized losses in excess of $2.7 million after 31 properties

defaulted.



Wendy Barker, a Dallas County Community College computer instructor, pled

guilty in U.S. District Court, Dallas, TX, to conspiracy tomake false statements to

a Federal agency. From July 2003 through September 2007, Barker and others

electronically altered or created fraudulent income, employment, and other

documents used by unqualified borrowers to obtain FHA-insured mortgages.

HUD realized losses of about $530,000 after 11 mortgages defaulted.



Copyright, 2008. Corsicana

Daily Star - Corsicana, TX.

Reprinted with permission.

Chapter 1: HUD’s Single-Family Housing Programs
             

             

14 Chapter 1: HUD’s Single-Family Housing Programs

Robert Green, doing business as Parkway Tax Service and Fast Tax, was

sentenced in U.S. District Court, New Orleans, LA, to 5 years probation and

ordered to pay HUD $8,000 in restitution for his earlier guilty plea to conspiracy.

Green prepared false Federal income tax returns used by unqualified straw

borrowers to obtain FHA-insured mortgages. HUD realized losses of $435,740

after six mortgages defaulted.



David Paul, the president of DCP Investment Properties, LLC, and Diane

Flannery, a former loan officer for Source Mortgage Corporation, were each

indicted in U.S. District Court, Philadelphia, PA, for committing mail fraud and

aiding and abetting. Paul allegedly provided fraudulent documents and

downpayment funds used by unqualified borrowers to obtain FHA-insured

mortgages, and Flannery allegedly originated FHA-insured mortgages for the

unqualified borrowers knowing Paul had provided fraudulent documents and

downpayment assistance. HUD realized losses of $280,000 after six mortgages

defaulted.



Denise Baskerville, an administrative assistant for M.T. Real Estate

Development, Inc., pled guilty in U.S. District Court, Newark, NJ, to conspiracy

to make false statements. Baskerville and others created and submitted fraudulent

documents used by unqualified borrowers to obtain FHA-insured mortgages. HUD

realized losses of $242,981 after 16 mortgages defaulted.



AMS Mortgage Company (AMS), 1st and 2nd Mortgage Company

of New Jersey, Inc., and National City Mortgage Company (National City),

located in Newark, NJ, each entered into Program Fraud Civil Remedies Act (PFCRA) settlements and

agreed to collectively pay HUD $201,747. AMS, 1st and 2nd Mortgage Company, and National City

certified fraudulent FHA-insured loan packages and submitted false claims for FHA-insurance benefits after

the borrowers defaulted.



Steven Winter, a former realtor for King Thompson Realty, was sentenced in U.S. District Court,

Columbus, OH, to 2 years incarceration and 3 years probation and ordered to pay HUD $174,720 and the

Internal Revenue Service (IRS) $183,517 in restitution for his earlier guilty plea to making false statements

and filing false Federal income tax returns. Winter falsified credit, employment, and other documents used by

unqualified borrowers to obtain FHA-insured mortgages and failed to report income from real estate sales on

his Federal income tax returns. HUD realized losses of $174,720 after five mortgages defaulted.



Copyright, 2008. The TimesPicayune - New Orleans, LA.

Reprinted with permission.
             

             

Chapter 1: HUD’s Single-Family Housing Programs 15

Uto Essien, owner of Essien & Co Realty, Ltd. (Essien); Idara Ekiko, a realtor for Essien; Scott Hinkley and

Jennifer Wolsey, a loan officer and processor for ABK Mortgage; and FHA-insured borrowers Cheri and Jessica

Decker and Heather Etuk were each indicted in Colorado District Court, Denver, CO, for committing theft,

committing theft by receiving, forgery, computer crimes, and violating the Colorado Organized Crime

Control Act. The above defendants allegedly used or provided false income, debt, and other documents for

themselves or other unqualified borrowers to obtain conventional and FHA-insured mortgages. HUD

realized losses of $153,814 after three FHA-insuredmortgages defaulted.



Gloria Matlock, a former loan officer for Supreme Lending, pled guilty in U.S. District Court, Dallas, TX,

to conspiracy to provide false statements to a Federal agency. Matlock and others created or submitted

fraudulent documents used by unqualified borrowers to obtain FHA-insured mortgages. HUD realized losses

of about $130,000 after two mortgages defaulted.



Raymond Talan, a former realtor for Remax Realty, pled guilty in U.S. District Court, Rockford, IL, to

mail fraud. Talan provided fraudulent documents used by unqualified borrowers to obtain FHA and

conventional mortgages. HUD realized losses of $86,300 after four mortgages defaulted.



Maria Gallucci, a realtor for Keller Williams and a loan officer for Uptown Mortgage Service, was charged

in Adams County District Court, Brighton, CO, with attempting to influence a public servant, forgery,

offering a false instrument for recording, and official misconduct by a notary public. Gallucci allegedly forged

the signature of her former spouse on documents associated with two FHA-insured properties she jointly

owned and personally notarized a document required for her FHA-insured loan file. HUD realized a loss of

$81,626 after one mortgage defaulted.



Winston Shillingford, the former president of now-defunct First Funding Mortgage Bankers (First

Funding), and former First Funding loan officer Marie Jean-Louis, each previously sentenced in U.S District

Court, Brooklyn, NY, for their guilty pleas to Federal income tax evasion or conspiracy to defraud HUD, were

debarred from procurement and nonprocurement transactions as a participant or principal with HUD and

throughout the Executive Branch of the Federal Government for 3 years. Jean-Louis created and provided

fraudulent documents used by unqualified borrowers to obtain FHA-insured mortgages, and Shillingford,

who obtained more than $300,000 from the sales of flipped FHA-insured properties originated by First

Funding, failed to report this income on his Federal income tax returns. HUD realized losses in excess of

$75,000 after three mortgages defaulted.



Guild Mortgage, a HUD-approved FHA mortgage lender in Los Angeles, CA, entered into a PFCRA

settlement and agreed to pay HUD $40,219. George Rivas, a former loan officer for Guild Mortgage

previously convicted of mail fraud and aiding and abetting, assisted an unqualified borrower who obtained an
             

             

16

FHA-insured mortgage. Guild Mortgage certified the fraudulent FHA-insured loan package and submitted a

false claim for FHA-insurance benefits after the borrower defaulted.



Stephen Lampkin, a former manager for Island Mortgage Network in Buffalo, NY, entered into a PFCRA

settlement and agreed to pay HUD $10,000. Lampkin, previously sentenced for his guilty plea to making a

false statement to HUD, certified FHA-insured loan packages that contained false documents.

Identity Fraud and False Social Security Numbers

Louis Ramon Luevano, also known as Ray Luevano, a real estate broker for Harvest Realty; Antonio Vitale,

also known as Tony Vitale, a former loan officer for Sterling Capital Mortgage Company; Celso

Galvan-Barrera, also known as Celso Galvin; Leonel Miramontes Armendariz; Jorge Ruedas Barajas; Jose Paz

Guerrero Ramirez; and Iris Rodriguez were each charged in Adams County District Court, Brighton, CO,

with committing theft, conspiracy, offering a false instrument for recording, attempting to influence, and

criminal impersonation to gain a benefit. The above defendants allegedly provided false Social Security

numbers (SSN) and fraudulent documents to obtain FHA-insured mortgages for themselves or other

unqualified borrowers. In addition, Claudia Hernandez-Martinez, also known as Claudia Hernandez or

Claudia Martinez, and Concepcion Hernandez-Herrera, also known as Claudia Hernandez or Claudia

Hernandez H, were each sentenced to 24 months probation and ordered to perform 50 hours of community

service for their earlier guilty pleas to conspiracy. Hernandez-Martinez and Hernandez-Herrera used false

SSNs to obtain and later default on FHA-insured mortgages. HUD realized losses in excess of $3.2 million

after 49 mortgages defaulted.



Rhonda Torossian and Nancy Rodriguez, a former loan officer and processor for RBC Mortgage, and

Cesar Arenas, a former realtor for Whitehead Realty, were sentenced in U.S. District Court, Rockford, IL,

for their earlier guilty pleas to conspiracy.

Torossian and Arenas were each sentenced

to 20 months incarceration and 3 years

probation and ordered to pay HUD $476,257

and $355,644 in restitution, respectively.

Rodriguez was sentenced to 5 years probation

and ordered to pay HUD $300,581

in restitution. Torossian, Rodriguez, Arenas, and

others provided false SSNs and fraudulent

employment, credit, and other documents used

by unqualified borrowers to obtain FHAinsured mortgages. HUD realized losses in

excess of $2 million after more than 50

mortgages defaulted.



Chapter 1: HUD’s Single-Family Housing Programs

Copyright, 2007. Rockford Register Star - Rockford, IL.

Reprinted with permission.
             

             

Chapter 1: HUD’s Single-Family Housing Programs 17

Rito Miguel Diaz, Sr., and Rito Miguel Diaz, Jr., real estate agents for Familia Realty, Realty World, or

Network Realty, each pled guilty in U.S. District Court, Los Angeles, CA, to mail fraud and aiding and

abetting. From September 1998 to January 2002, Diaz, Sr., Diaz, Jr., and their mother, previously indicted

Rosemary Diaz, provided or created fraudulent identification, employment, credit, and other documents used

by unqualified borrowers to obtain FHA-insured mortgages. HUD realized losses in excess of $900,000 after

18 mortgages defaulted.



Jose Antonio Caballero, owner of American International Finance and Mortgage Services, Inc., was

sentenced in U.S. District Court, Dallas, TX, to 12 months incarceration and 36 months supervised release

and ordered to pay HUD $119,620 in restitution for his earlier guilty plea to making a false statement.

Caballero failed to claim a prior felony conviction on his FHA lender application and provided false SSNs or

IRS employment identifications used by unqualified and undocumented immigrants to obtain FHA-insured

mortgages. HUD realized losses of about $400,000 after 11 mortgages defaulted.



Caridad Prados, a straw borrower indicted in U.S. District Court, Newark, NJ, for conspiracy to defraud

HUD and using a false SSN, was suspended from procurement and nonprocurement transactions as a

participant or principal with HUD and throughout the Executive Branch of the Federal Government. Prados

and others allegedly submitted fraudulent documents to obtain FHA-insured mortgages. HUD realized losses

in excess of $349,000 after 12 mortgages defaulted.



Santiago Contreras Sauceda, Alejandro Cruz, Julio Interiano, Cipriano Negrete, and Miguel Alcala each

pled guilty in Dallas County District Court, Dallas, TX, to securing execution of a document by deception,

each defendant was sentenced to 2 years probation, and they were collectively fined $2,391. In addition, Erik

Alonso pled guilty to securing execution of document by deception and was sentenced to 3 months

confinement, fined $722, and placed into immigration deportation proceedings. The above defendants used

false SSNs and submitted fraudulent documents to obtain and later default on FHA-insured mortgages. HUD

realized losses of $162,819 after their mortgages defaulted.

Bankruptcy Fraud

Carlos Castelan was sentenced in U.S. District Court, Salt Lake City, UT, to 15 months incarceration and

36 months probation and ordered to pay HUD $45,736 in restitution for his earlier guilty plea to making false

statements and destroying, altering, or falsifying records in a bankruptcy or Federal investigation. Castelan

used a false SSN when he obtained an FHA-insured mortgage and filed for bankruptcy. HUD realized a loss

of $62,000 after his mortgage defaulted.



Steven Sturdivant, a former Chicago Housing Authority (CHA) Section 8 landlord, and his wife, Yasmeen

Sturdivant, were each charged in U.S. District Court, Chicago, IL, with committing bankruptcy fraud,

concealment of assets, or wire fraud. Steven and Yasmeen Sturdivant allegedly provided fraudulent documents
             

             

18

to obtain FHA-insured or conventional mortgages, and Steven Sturdivant allegedly failed to report CHA

housing contract payments on bankruptcy petitions and filed numerous bankruptcies to delay foreclosure

proceedings. HUD realized a loss of $30,841 after one FHA-insured mortgage defaulted.



Venus Trillet was arrested and charged in Lawrenceville Superior Court, Norcross, GA, with committing

forgery. Trillet allegedly forged the signature of her former spouse when she refinanced her FHA-insured

mortgage, failed to pay 12 mortgage payments, and filed bankruptcy to impede foreclosure proceedings.

Other Single-Family Fraud

Rockney Martineau was sentenced in Maricopa County Superior Court, Phoenix, AZ, to 5 years

incarceration and ordered to pay HUD $149,796 in restitution for his earlier guilty plea to committing

fraudulent schemes. Martineau illegally entered two HUD-owned homes, filed false deeds claiming property

ownership, fraudulently delayed his eviction from the properties, and caused HUD losses of $149,796.



Debra Molina, a San Bernardino County probation officer and HUD Good Neighbor Next Door

(Good Neighbor) program participant, was charged in U.S. District Court, Riverside, CA, with making false

statements. Molina obtained a HUD-owned property and received a $67,500 discount, but Molina allegedly

failed to reside in her Good Neighbor property or report her nonresidency on HUD certifications.



Francisco Renteria, a U.S. Department of Homeland Security supervisory immigration officer and

Good Neighbor program participant, pled guilty in U.S. District Court, El Paso, TX, to making false

statements to HUD. Renteria was sentenced to 3 years probation, ordered to pay HUD $16,800 in

restitution, and fined $1,000. Renteria obtained a HUD-owned property and received a $57,000 discount,

but Renteria failed to claim previously owned residential properties or his nonresidency in his Good Neighbor

property on HUD certifications.



Prisciliano Peralta, Sr., was charged in Adams County District Court, Brighton, CO, with committing

theft, forgery, offering a false instrument for recording, and criminal impersonation. Peralta allegedly used an

FHA-insured property owned by another as collateral for a $20,000 bail bond, but the individual released on

bail failed to appear in court, and HUD realized a loss of about $54,753 after the mortgage defaulted.



Sammie Parr III, a Chicago Police Department officer and HUD Officer/Teacher Next Door

(Officer/Teacher) program participant, was charged in a civil complaint filed in U.S. District Court, Chicago,

IL, with making false claims and breach of contract. Parr obtained a HUD-owned property and received a

$49,950 discount, but Parr allegedly failed to report his ownership of additional real estate on HUD

certifications.



Chapter 1: HUD’s Single-Family Housing Programs
             

             

Chapter 1: HUD’s Single-Family Housing Programs 19

Kristine Knowles, a teacher and an Officer/Teacher program participant, agreed to a civil judgment filed in

U.S. District Court, Chicago, IL, and paid the U.S. Department of Justice $35,000 in restitution. Knowles

obtained a HUD-owned property at a 50 percent discount and certified the property as her sole residence, but

Knowles failed to reside in the property or report her ownership of additional real estate on HUD

certifications.



Rena Haley, a Baltimore Police Department sergeant and an Officer/Teacher program participant, entered

into a PFCRA settlement in Baltimore, MD, and agreed to pay HUD $39,220 in restitution. Haley obtained

a HUD-owned property and received a $33,720 discount, but Haley failed to reside in the Officer/Teacher

property or report her nonresidency on HUD certifications.



Robert Miller was convicted in U.S. District Court, Washington, DC, of wire fraud and inducement to

travel in interstate commerce in execution of a scheme to defraud. Miller posed as a lawyer, realtor, mortgage

broker, foreclosure expert, and other professionals; obtained about $500,000 from investors to purchase

HUD-owned and other properties to "flip" for a profit; and then failed to purchase investment properties and

used investor funds for his personal benefit.



Carey O'Laughlin, president of National Housing Foundation, a nonprofit approved by HUD to obtain

FHA-insured mortgages, was indicted in U.S. District Court, Chicago, IL, for making false statements to a

federally insured bank. O'Laughlin allegedly obtained and defaulted on $1 million in bank credit after he

provided fraudulent financial statements and documents to American Charter Bank.


Acronyms List

               

               

Chapter 2

HUD’s Public and

Indian Housing

Programs
             

             

22

The U.S. Department of Housing and Urban Development (HUD) provides grants and subsidies to

5,158 public housing agencies (PHA) nationwide. Many PHAs administer both public housing and Section 8

programs. Programs administered by PHAs are designed to enable low-income families, the elderly, and

persons with disabilities to obtain and reside in housing that is safe, decent, sanitary, and in good repair. In

addition to the audits and investigations described in this chapter, the Office of Inspector General (OIG), has

conducted numerous outreach efforts (see chapter 7, page 119).

Audits

Strategic Initiative 2: Contribute to the reduction of erroneous

payments in rental assistance

* This does not include hurricane relief audits. See chapter 5 for these reviews.

Region 1

4%

Region 3

12%

Region 2

0%

Region 4

12%

Region 11

(Disaster Relief Oversight)

%(N/A)*

Region 5

12%

Region 6

19%

Region 7-8

19%

Region 9-10

22%

Key program results Questioned costs Funds put to better use

Audit 26 audits $49 million $294 million

Our

focus

Page 23

Page 23

Page 27

Page 32

- Community service and self-sufficiency program

- Section 8 Housing Choice Voucher program activities at PHAs

- Public housing program activities

- Native American programs

Chapter 2: HUD’s Public and Indian Housing Programs

Chart 2.1: Percentage of OIG public and Indian housing audit reports

during this reporting period
             

             

Chapter 2: HUD’s Public and Indian Housing Programs 23

Community Service and Self-Sufficiency Program

HUD OIG audited HUD's community service and self-sufficiency requirement to determine whether

HUD ensured that housing authorities properly administered the requirement.

HUD did not have adequate controls to ensure that housing authorities properly administered the

requirement. It did not have sufficient guidelines, adequate data collection and reporting systems, or effective

enforcement mechanisms. Of 68 households reviewed, 44 did not comply with the requirement and were,

therefore, ineligible for continued occupancy. We estimate that housing authorities improperly renewed or

extended the leases of at least 85,000 ineligible households, thereby costing an estimated $21.5 million in

monthly operating subsidies.

OIG recommended that HUD improve its controls to ensure that housing authorities properly administer

the requirement, resulting in more than $257 million being put to better use annually. In addition, OIG

recommended that HUD require housing authorities to take corrective action against the 44 ineligible

households identified. (Audit Report: 2008-KC-0002)

Section 8 Housing Choice Voucher Program Activities at PHAs

Audits of the Section 8 Housing Choice Voucher program were a priority during this semiannual reporting

period. PHAs were selected for audit based on risk analysis and/or hotline complaints. While OIG's objectives

varied by auditee, the majority of the reviews were to determine whether the units met housing quality

standards, whether the PHA managed the program according to HUD requirements, and whether the

eligibility of the tenants was correctly determined. The following section illustrates the audits conducted in

the Section 8 Housing Choice Voucher program area.

HUD OIG audited the Dallas Housing Authority, Dallas, TX, regarding the financial management of its

Housing Choice Voucher program. Contrary to requirements, Authority management failed to implement

internal controls over the financial management of the program and did not exercise sound management

practices. As a result, the Authority's financial data were unreliable, its fund balances were incorrect, and it

could not assure HUD that it spent program funds in accordance with its annual contributions contract or

Federal regulations. Further, the Authority certified to HUD that it expended significantly less in program

funds than it received in 2005 and 2006.

OIG recommended that HUD require the Authority to support or repay more than $32.4 million, void

and properly reclassify nearly $649,000 in outstanding checks, and implement effective internal controls over

the financial operations of its Housing Choice Voucher program. In addition, OIG recommended that HUD

take appropriate administrative sanctions, up to and including issuing a notice of default in accordance with its

annual contributions contract for the rental certificate and rental voucher programs to ensure that the

Authority complies with requirements. (Audit Report: 2008-FW-1006)



HUD OIG also audited the portability features of the Housing Choice Voucher program at the Dallas

Housing Authority in Dallas, TX. The Authority (1) mismanaged its portable vouchers and failed to

administer portability in accordance with HUD requirements, (2) could not identify its portable families and
             

             

24

attempted to collect portability payments from other housing authorities based on unreliable billing

information, (3) did not bill other housing authorities or reconcile its accounts accurately or in a timely

manner, and (4) violated portability requirements by denying and discouraging families wishing to port into

its Housing Choice Voucher program.

OIG recommended that HUD require the Authority to (1) reconcile its portability accounts, (2) establish

and implement necessary controls to ensure that its program complies with HUD requirements, (3) establish

and implement controls to ensure that employees cannot manipulate accounting data, (4) repay administrative

fees collected for its port Housing Choice Voucher program since it did not properly administer the program,

and (5) repay more than $3.7 million that it inappropriately requested from HUD. (Audit Report:

2008-FW-1003)



HUD OIG audited the Section 8 Housing Choice Voucher program of the Shreveport Housing

Authority, Shreveport, LA. Of the 66 units inspected, 62 did not meet minimum housing quality standards,

and 47 were materially noncompliant with HUD standards. As a result, tenants lived in units that were not

decent, safe, and sanitary.

OIG recommended that HUD require the Authority to (1) inspect the 62 units that did not meet

minimum housing quality standards to verify that the owners took appropriate corrective action to make the

units decent, safe, and sanitary; (2) reinspect all of its Section 8 units, including those units that it owns, and

ensure that they meet housing quality standards and if any of the units cannot be made decent, safe, and

sanitary, either abate the housing assistance payments or terminate the tenant's voucher as appropriate; and

(3) implement procedures and controls to ensure that its Section 8 units and inspections meet HUD

requirements to prevent $6.1 million in future assistance payments from being spent on units that do not meet

standards. (Audit Report: 2008-FW-1002)



HUD OIG audited the Section 8 Housing Choice Voucher program of the Housing Authority of the

County of Los Angeles, Los Angeles, CA. The Authority did not comply with HUD's requirements or its own

administrative plan in performing reexaminations. It incorrectly calculated housing assistance payments, did

not complete tenant reexaminations in a timely manner, and improperly changed reexamination due dates. As

a result, it made improper and unsupported housing assistance payments, collected unearned administrative

fees between 2005 and 2006, and continued to put its program at risk.

OIG recommended that HUD direct the Los Angeles County Board of Supervisors to replace the

executive director and hire a new Assisted Housing Division director. OIG also recommended that HUD

withhold 10 percent of the Authority's future administrative fees until it properly implements its new

computer system; direct the Authority to reimburse HUD $3.6 million in fiscal year 2005 and 2006

administrative fees; and require the Authority to reimburse overpayments of more than $33,000 from nonfederal

funds, reimburse tenants nearly $3,000 for underpayments, and provide support or reimburse the program

nearly $6,000 for unsupported costs. (Audit Report: 2008-LA-1007)



Chapter 2: HUD’s Public and Indian Housing Programs
             

             

Chapter 2: HUD’s Public and Indian Housing Programs 25

HUD OIG performed a corrective action verification of the audit recommendations cited in the audit

report, Miami-Dade Housing Agency Did Not Ensure Section 8-Assisted Units Met Housing Quality

Standards (2006-AT-1001), issued December 21, 2005. The purpose of the corrective action verification was

to determine whether the selected audit recommendations were implemented and the deficiencies reported in

the audit report corrected.

The Agency, located in Miami, FL, disregarded the management decisions and did not implement the

promised corrective action. It did not correct the housing quality standards violations OIG cited in the audit

and failed to implement its revised Section 8 administrative plan. As a result, the deficiencies cited in the audit

report were not corrected, and the Agency continued to violate HUD requirements.

OIG recommended and HUD agreed with reopening recommendations 1A and 1B from audit report

2006-AT-1001 because the Agency did not implement the agreed-upon corrective actions. (Audit

Report: 2008-AT-0801)



HUD OIG audited the Housing Authority of the City of Allentown, PA, and found that the Authority

generally calculated housing assistance payments accurately and properly maintained documentation in its

tenant files for its Section 8 program. However, it did not settle interfund payables accruing to its Section 8

program in a timely manner and did not allocate administrative salary and benefit costs to its programs on a

reasonable and fair basis. As a result, the Authority allowed the Section 8 program's interfund payables to

accumulate to more than $760,000 over a 10-month period, and it charged excess administrative salary and

associated employee benefit costs totaling nearly $151,000 to its low-rent public housing program.

OIG recommended that HUD verify the Authority's reimbursement to settle the Section 8 program's

interfund payables and direct the Authority to reimburse its low-rent public housing program from the

programs that benefited from the improper allocation of administrative salary and benefit costs. (Audit

Report: 2008-PH-1003)



HUD OIG audited the Section 8 Housing Choice Voucher program of the Holyoke Housing Authority,

Holyoke, MA. Of the 63 program units inspected, 43 failed inspection, and 26 were materially noncompliant

with housing quality standards. The Authority did not always perform its inspection or notify the owners of

inspection results in a timely manner or abate the housing assistance payments when repairs were not made as

required. It also did not have an adequate quality control process in place to ensure that inspections detected

housing quality standards violations or were properly performed and in compliance with HUD's and the

Authority's requirements.

OIG recommended that HUD require the Authority to implement controls to ensure that (1) its

inspection policies and procedures are followed and that all units meet HUD's housing quality standards to

prevent $1.6 million in program funds from being spent on units that are in material noncompliance and

(2) future Section 8 quality control inspections are properly performed and supported by adequate

documentation. (Audit Report: 2008-BO-1002)


             

             

26

HUD OIG audited the Municipality of Ponce, PR's (authority) Section 8 Housing Choice Voucher

program. Of the 54 units inspected, 39 did not meet minimum housing quality standards, and 12 of those

were in material noncompliance. The authority also failed to ensure that annual housing quality inspections

were performed in a timely manner. As a result, Section 8 program funds were not used to provide units that

were decent, safe, and sanitary; and the authority made housing assistance payments for units that did not meet

standards. The authority also did not pay program landlords in a timely manner or apply utility allowances for

tenant-supplied appliances.

OIG recommended that HUD require the authority to (1) inspect all of the 39 units that did not meet

minimum housing quality standards to verify that the landlords took appropriate corrective actions and if

appropriate actions were not taken, abate the rents or terminate the tenants' vouchers; (2) establish and

implement adequate procedures and controls to prevent more than $190,000 from being spent on units with

material housing quality standards violations and for the timely disbursement of more than $185,000 in back

payments to landlords; and (3) develop a utility allowance schedule that complies with program requirements

and recognizes the costs of tenant-supplied appliances to ensure that more than $71,000 in program funds is

used in accordance with HUD requirements. (Audit Report: 2008-AT-1001)



HUD OIG reviewed the Housing Authority of the City of Napa, CA's Section 8 program to determine

whether concerns raised in a complaint relating to misappropriation of Section 8 funds had merit and whether

allegations of improper rent increases for the Section 8 Moderate Rehabilitation Single Room Occupancy

(Mod Rehab) and Section 8 Housing Choice Voucher programs were valid.

The allegation relating to the misappropriation of Section 8 funds had no merit. However, the Authority

improperly increased contract rents for eight units at a Section 8 Mod Rehab project, resulting in the Authority's

paying more than $63,000 in excess housing assistance payments to the owner. Additionally, the Authority did

not properly determine reasonable rents for the Section 8 Housing Choice Voucher program units. As a result,

it potentially overpaid housing assistance to the owners.

OIG recommended that HUD require the Authority to (1) reimburse the excessive housing assistance

payments related to the Section 8 Mod Rehab units; (2) develop and implement written policies, procedures,

and controls for administering its Section 8 Mod Rehab program in compliance with HUD regulations;

(3) establish procedures and implement controls to ensure that its rent reasonableness determination process is

in accordance with HUD rules and regulations; (4) establish procedures and implement controls to ensure that

the comparable database is up-to-date, complete, and verified; and (5) conduct training for all individuals

involved in rent reasonableness determinations. OIG also recommended that HUD coordinate with OIG to

conduct a postaudit verification review to determine whether corrective actions were implemented. (Audit

Report: 2008-LA-1002)



HUD OIG audited the Section 8 Housing Choice Voucher program of the Anaheim Housing Authority,

Anaheim, CA, and found that the Authority incorrectly calculated housing assistance payments and processed

annual recertifications without ensuring that all HUD requirements were met. OIG identified more than

$6,000 in housing assistance overpayments and $90 in housing assistance underpayments related to 4 of 10

tenant reexaminations. In addition, although the Authority had significantly improved its rent reasonableness

Chapter 2: HUD’s Public and Indian Housing Programs
             

             

Chapter 2: HUD’s Public and Indian Housing Programs 27

practices since late 2006, its rent reasonableness procedures were not in accordance with all HUD rules and

regulations.

OIG recommended that HUD require the Authority to (1) reimburse the program from nonfederal funds

for the overpayment of housing assistance; (2) reimburse the appropriate tenant from program funds for the

underpayment of housing assistance; (3) ensure that the new administrative plan is properly implemented

throughout the organization; and (4) implement additional procedures and controls over eligibility, quality

control reviews, and rent reasonableness determinations. (Audit Report: 2008-LA-1005)



HUD OIG audited the Housing Authority of the City of Colorado Springs, CO, to determine whether it

followed Federal procurement requirements and its own procurement policies in awarding two capital fund

rehabilitation contracts, properly administered all work done by its contractor, and followed Federal

occupancy requirements and its own administrative plan in maintaining its Section 8 waiting list and selecting

eligible applicants from its waiting list.

The Authority did not follow applicable requirements while awarding and administering two capital fund

rehabilitation contracts. It also violated applicable requirements while maintaining its Section 8 waiting list

and selecting participants from the waiting list. It had no assurance that it received the best price when

awarding two contracts that eventually paid out more than $2.2 million. In addition, it did not administer the

contracts according to requirements when it paid more than $570,000 to the contractor for services provided

outside the scope of the statement of work on the contracts, and it improperly maintained its waiting list and

selected tenants without regard to the waiting list or appropriate support.

OIG recommended that HUD require the Authority to provide training and implement controls to ensure

that written procedures are followed. In addition, OIG recommended that HUD perform a postmonitoring

review to ensure that the Authority took recommended actions. (Audit Report: 2008-DE-1001)

Public Housing Program Activities

HUD OIG audited the District of Columbia Housing Authority's administration of its leased housing

under its Moving to Work Demonstration program in Washington, DC, to determine whether the Authority

ensured that its program units met housing quality standards.

Of 70 housing units inspected, 67 did not meet HUD's housing quality standards, and 48 of the units had

exigent health and safety violations that the Authority's inspectors neglected to report during their last

inspection. The Authority spent nearly $193,000 in program and administrative funds for these 48 units.

OIG recommended that HUD require the Authority to (1) ensure that housing units inspected during the

audit are repaired to meet HUD's housing quality standards, (2) reimburse its program from nonfederal funds

for the improper use of program funds for units that materially failed to meet HUD's standards, and

(3) implement adequate procedures and controls to ensure that program units meet housing quality standards

to prevent an estimated $21.7 million from being spent annually on units with material housing quality

standards violations. (Audit Report: 2008-PH-1001)


             

             

28

HUD OIG audited the Housing Authority of the City of Michigan City, IN's nonprofit development

activities to determine whether the Authority diverted or pledged resources subject to its annual contributions

contract, other agreements, or regulations for the benefit of non-HUD developments.

The Authority diverted and pledged assets subject to its contracts, other agreements, or HUD's regulations

for the benefit of Michigan City Housing Development, Incorporated, the Authority's nonprofit entity. It

failed to file declarations of trust on 32 properties purchased using Turnkey III Homeownership sales proceeds.

It also inappropriately transferred ownership of 29 of the 32 properties, valued at more than $1.1 million, to its

nonprofit without HUD approval and did not ensure that it complied with its HUD-approved plan regarding

the use of the sales proceeds. As a result, fewer funds were available to serve the Authority's low-income

families. Further, the Authority did not comply with HUD's property disposition requirements and did not

ensure that its nonprofit used the proceeds from the sale of property in accordance with its agreement with

HUD. As a result, HUD lacks assurance that the sale of the property served the best interests of HUD, the

Authority, and its residents.

OIG recommended that HUD require the Authority to (1) submit executed declarations of trust for the

Turnkey III properties to HUD, (2) negotiate with its nonprofit to transfer ownership of the 29 Turnkey III

properties back to the Authority and amend its promissory note with Horizon Bank to remove the properties

held as collateral or pay HUD for the properties from nonfederal funds, (3) reimburse its public housing

program from nonfederal funds for rental income received from the Turnkey III properties, (4) replenish its

public housing program to comply with its approved HUD plan or provide a revised plan to HUD for review

and approval, (5) implement adequate procedures and controls for monitoring the progress of the urban park

development or exercise its right to reversion of title if the park is not fully developed, (6) negotiate with its

nonprofit to discontinue using sales proceeds to pay interest payments, and (7) implement a written plan for

use of the proceeds. OIG also recommended that HUD take appropriate action to declare the Authority in

substantial default of its contract. (Audit Report: 2008-CH-1001)



HUD OIG reviewed the development activities of the Douglas County Housing Authority, Omaha, NE,

to determine whether the Authority encumbered or spent HUD assets for nonfederal development activities

without HUD approval.

The Authority (1) inappropriately encumbered nearly $1.67 million in Federal assets when it entered into

loan documents containing setoff provisions against the Authority's HUD-related bank accounts,

(2) inappropriately entered into partnership agreements that made it responsible for all operating deficits of

two nonfederal developments, (3) inappropriately spent nearly $860,000 in public housing funds on three

nonfederal developments, and (4) arbitrarily allocated nearly $730,000 of its administrative and maintenance

supervisor salaries to its Federal programs without adequate support.

OIG recommended that HUD require the Authority to (1) improve its controls, obtain adequate releases

from the loan commitments and partnership agreements for the nonfederal developments, and repay its public

housing program for any Federal funds used inappropriately; (2) reimburse its HUD programs; and

(3) reimburse its HUD programs for any salary allocations it cannot support and implement an acceptable

method for allocating future salary and benefits costs. OIG also recommended that HUD take appropriate

Chapter 2: HUD’s Public and Indian Housing Programs
             

             

29

administrative actions against the Authority, its chief executive officer, and members of its board of

commissioners for violating HUD rules. (Audit Report: 2008-KC-1001)



HUD OIG audited the Housing Authority of the City of McKinney, TX, to determine whether the

Authority's transactions with its affiliated nonprofit, the McKinney Housing Opportunity Corporation,

complied with HUD requirements.

In violation of its annual contributions contract, the Authority inappropriately provided funds and real

estate to its not-for-profit affiliate and did not follow requirements when it made housing assistance payments

to the Corporation. It did not obtain independent determinations of fair market rents or compliance with

housing quality standards for properties owned by the Corporation.

OIG recommended that HUD require the Authority to (1) repay more than $915,000 to its low-income

accounts, (2) support more than $79,000 in housing assistance payments to the Corporation by obtaining

independent determinations of fair market rents and compliance with housing quality standards,

and (3) implement policies and procedures to ensure that it complies with HUD requirements. (Audit

Report: 2008-FW-1005)



HUD OIG audited the public housing and Public Housing Capital Fund

programs of the Highland Park Housing Commission, Highland Park, MI, to

determine whether the Commission effectively administered its program and

followed HUD's requirements.

The Commission's administration of its programs, regarding admission and

occupancy and procurement, was inadequate. It did not comply with HUD's

requirements and its policies in administering its admission and occupancy

process. It was unable to support more than $153,000 in public housing

operating subsidies received, did not receive total household payments of nearly

$29,000, received excess total household payments of more than $13,000, and

received nearly $8,000 in public housing operating subsidies to which it was not

entitled. Further, the Commission's procurement activities were not conducted

according to its and HUD's requirements. It did not follow HUD's requirements

for full and open competition regarding the procurement of professional, housing

maintenance, and general cleaning services totaling nearly $83,000 and did not

have supporting documentation for work costing more than $61,000 under the

Commission's Public Housing Capital Fund program.

OIG recommended that HUD require the Commission to provide support

or reimburse its applicable program from nonfederal funds for the unsupported

payments, reimburse its applicable program from nonfederal funds for the

Copyright, 2008. Detroit Free

Press - Detroit, MI. Reprinted

with permission.

Chapter 2: HUD’s Public and Indian Housing Programs
             

             

30

improper use of funds, and implement adequate procedures and controls to help ensure that nearly $70,000 in

public housing funds will be put to better use. (Audit Report: 2008-CH-1003)



HUD OIG audited the 5(h) homeownership program of the Akron Metropolitan Housing Authority,

Akron, OH, to determine whether the Authority properly accounted for and used its program's proceeds in

accordance with requirements.

The Authority failed to maintain a separate identity for more than $196,000 of its program's proceeds

because it commingled the proceeds with funds in its general public housing fund account. It also did not use

its program sales proceeds in a timely manner. As a result, the program's proceeds were not used to assist

low-income families.

OIG recommended that HUD require the Authority to (1) reimburse its appropriate account the 5(h)

sales proceeds plus earned interest, (2) submit a proposal for HUD's approval on how the program's proceeds

will be used, and (3) implement adequate procedures and controls to ensure that the proceeds are used to

provide housing assistance for low-income families in accordance with HUD's requirements. (Audit Report:

2008-CH-1002)



HUD OIG reviewed the capital fund program of the Housing Authority of the County of San Joaquin,

Stockton, CA, to determine whether the Authority used capital funds in accordance with HUD rules and

regulations.

The Authority did not use capital funds in accordance with requirements. It used nearly $176,000 to

absorb shared administrative costs of other housing programs, improperly charged nearly $115,000 in

ineligible indirect administrative fees, recorded more than $77,000 in additional questioned costs to its capital

fund grant, and did not have policies and procedures in place to ensure accurate and complete financial information.

OIG recommended that HUD require the Authority to repay HUD and reimburse the capital fund

for shared administrative costs from other housing programs and ineligible administrative fees. OIG also

recommended that the Authority remove liabilities from its accounting records and establish policies and

procedures to ensure that it spends and supports its use of capital funds in accordance with HUD

requirements. (Audit Report: 2008-LA-1008)



HUD OIG audited Green River Management, Inc., Ada, OK, which managed the Housing Authorities of

the City of Konawa, City of Langston, City of Pauls Valley, City of Wynnewood, Town of Cheyenne, and

Caddo Electric Cooperative, to determine whether the housing authorities appropriately procured Green River

as their management agent, maintained properties, and carried out their financial responsibilities in

accordance with HUD rules and regulations and their policies and procedures.

Chapter 2: HUD’s Public and Indian Housing Programs
             

             

31

The housing authorities did not appropriately procure their management agent contracts, did not use

more than $199,000 in accordance with requirements, and unnecessarily paid a commissioner of Konawa

nearly $6,000 as an insurance agent when they could have purchased the insurance directly from the company.

Further, Langston did not maintain its units in good condition or manage certain aspects of its operations in

accordance with requirements. As a result, the housing authorities misspent more than $205,000 and could

put more than $84,000 to better use by reprocuring the management agent contracts.

OIG recommended that HUD require (1) the housing authorities to reprocure their management agent

contracts; (2) Langston to correct its physical conditions and implement procedures to ensure that its units are

maintained in a decent, safe, and sanitary condition; (3) the housing authorities to support or repay the

misspent funds; and (4) the housing authorities to comply with HUD and State requirements. (Audit

Report: 2008-FW-1001)



HUD OIG audited the Schuyler Housing Authority, Schuyler, NE, to determine whether the Authority

improperly spent public housing assets when developing and operating an assisted living program.

The Authority inappropriately used more than $78,000 in public housing funds to pay expenses of a

non-HUD assisted living program, improperly allowed the assisted living entity to collect more than $60,000

in public housing rent, and did not maintain tenant records or accurately report tenant data to HUD for

assisted living participants.

OIG recommended that HUD require the Authority to obtain repayment from the non-HUD assisted

living entity for those expenses paid on the entity's behalf, collect public housing tenant rents that the entity

had not transferred to the Authority, and implement controls to separate public housing revenues and expenses

from those of the assisted living program. OIG also recommended that HUD monitor the Authority to

ensure that it does not continue to inappropriately support the assisted living program. (Audit Report:

2008-KC-1002)



HUD OIG audited the Housing Authority of Baltimore City's administration of its leased housing under

its Moving to Work Demonstration program in Baltimore, MD, to determine whether the Authority's

controls over its tenant files were adequate to ensure compliance with HUD requirements.

The Authority's controls were generally sufficient to ensure that tenant files contained the required

documentation, and its tenant files were orderly and contained certification and recertification documents in

accordance with HUD requirements. However, in 7 of the 22 tenant files reviewed, the Authority incorrectly

calculated housing assistance payments, resulting in more than $3,000 in overpayments and nearly $3,000 in

underpayments. The Authority was in the process of strengthening its controls over housing assistance

payment determination to ensure that it made future housing assistance payments accurately and in

accordance with HUD requirements.

OIG recommended that HUD require the Authority to reimburse its program from nonfederal funds for

the overpayment of housing assistance and reimburse applicable tenants for housing assistance underpayments,

Chapter 2: HUD’s Public and Indian Housing Programs
             

             

32

thereby putting these funds to better use. OIG further recommended that HUD conduct a followup review to

ensure that the Authority's planned process improvements are implemented. (Audit Report: 2008-PH-1004)



HUD OIG audited HUD's oversight of the Housing Authority of DeKalb County, Atlanta, GA, with

regard to the Authority's compliance with its memorandum of agreement to determine whether HUD

adequately monitored the Authority's implementation of operating improvements required in the agreement.

HUD did not ensure that the Authority accurately implemented its agreement. The Authority did not

implement some tasks related to financial management and procurement. As a result, it was released from its

agreement without fully completing and implementing it. Thus, HUD could not be assured that the Authority's

public housing program was managed in a manner consistent with sound financial practices.

OIG recommended that HUD perform a comprehensive review of the Authority's procurement function

to ensure that it is operating in accordance with Federal and State regulations and perform either staff or

independent public accountant on-site review of the financial management internal controls to ensure that the

Authority has adequate financial internal controls regarding the disbursement of funds. (Audit Report:

2008-AT-0001)



HUD OIG audited the Housing Authority of the City of Brighton, CO, to determine whether the

Authority had an adequate inventory control system and whether it performed contracting activities in

accordance with Federal procurement requirements.

The Authority did not have complete and accurate inventory records of its fixed assets. It also violated

Federal procurement requirements while awarding two service contracts worth approximately $52,000.

OIG recommended that HUD require the Authority to perform a complete physical inventory of its fixed

assets, develop and implement inventory control practices, and properly train its procurement staff. In

addition, OIG recommended that HUD perform a postmonitoring review to ensure that the Authority took

recommended actions. (Audit Report: 2008-DE-1002)

Native American Programs

HUD OIG audited Oneida Housing Authority, Oneida, WI, to determine whether the Authority

calculated program income for Native American Housing Assistance and Self Determination Act of 1996

(NAHASDA)-assisted United States Housing Act of 1937 (1937 Act) properties in accordance with applicable

HUD guidance, regulations, and requirements and to observe uses of revenue from NAHASDA-assisted 1937

Act properties.

The Authority failed to track NAHASDA Indian Housing Block Grant (Block Grant) rehabilitation or

capital expenses for each property and restrict nonprogram income from its Mutual Help program. As a result,

more than $2.2 million in combined low-rent and Mutual Help housing receipts was inappropriately classified

as nonprogram income, and the proceeds from the sale of Mutual Help units were not restricted to eligible

uses. Further, the Authority's financial auditor identified from $60,000 to $100,000 in disbursements for

Chapter 2: HUD’s Public and Indian Housing Programs
             

             

Chapter 2: HUD’s Public and Indian Housing Programs 33

2006 board expenses as abusive. Those costs were paid from the Authority's local fund, which contained

nonprogram income from 1937 Act units.

OIG recommended that HUD (1) require the Authority to implement policies and procedures to

determine program income in accordance with HUD requirements, (2) evaluate the Authority's computation

of low-rent program income and determine whether the estimated unit labor costs are adequate to document

the total costs of rehabilitation or capital costs or reclassify the nearly $991,000 in nonprogram income as

Block Grant program income, (3) evaluate the Authority's computation of Mutual Help program income and

determine whether the estimated unit labor costs are adequate to document the total cost of rehabilitation or

capital costs or reclassify more than $1.2 million in nonprogram income as Block Grant program income, and

(4) require the Authority to implement policies and procedures restricting the use of nonprogram income from

Mutual Help proceeds of sale to eligible activities. (Audit Report: 2008-SE-1002)



HUD OIG audited Warm Springs Housing Authority, Warm Springs, OR, to determine whether the

Authority calculated program income for NAHASDA-assisted 1937 Act properties in accordance with

applicable HUD guidance, regulations, and requirements and to observe uses of revenue from

NAHASDA-assisted 1937 Act properties.

The Authority did not have an adequate accounting process and system in place to accurately allocate

income from 1937 Act properties receiving Block Grant program assistance between the 1937 Act and Block

Grant programs. It failed to track cumulative NAHASDA modernization expenses for each property and did

not allocate the property's share of income attributable to the NAHASDA Block Grant program. As a result,

it inappropriately removed more than $1.4 million in low-income receipts from HUD-monitored NAHASDA

affordable housing activities and used restricted funds to pay for more than $204,000 in unsupported travel

expenses. The low-income housing receipts were used to repay unsupported compensation of housing officials

and travel expenses identified during a 2003 monitoring review. Other uses of nonprogram income included

unallowable bad debt, personal expenses on Authority credit cards, miscellaneous HUD-rejected expenses, and

maintenance of tribal housing outside the NAHASDA program.

OIG recommended that HUD require the Authority to (1) establish an accounting system that allocates

income attributable to the NAHASDA program and documents the total cost of NAHASDA-funded

rehabilitation and capital improvements or return the funds withdrawn from 1937 Act revenue to the NAHASDA

program, (2) reconcile insurance proceeds and ensure that they are credited to NAHASDA-eligible activities

for any policy paid using NAHASDA funds or policies covering NAHASDA-assisted units, (3) establish a

separate accounting for Mutual Help program proceeds of sale to ensure proper restriction on the use of those

funds, and (4) complete repayment of the unsupported travel expenses. (Audit Report: 2008-SE-1001)


             

             

34

Investigation

Some investigations discussed in this report were generated from leads provided by HUD public and

Indian housing program staff or conducted jointly with Federal, State, and local law enforcement agencies.

The results of various significant investigations are described below.

Strategic Initiative 2: Contribute to the reduction of erroneous

payments in rental assistance

$

recovered

Admin/civil

actions

Investigations 275 $5.8 million 323

Our

focus

Page 35

Page 38

Page 51

Page 54

Page 55

Page 56

- Public housing authority theft/embezzlement

- Rental assistance fraud

- FedRent Initiative

- Fugitive Felon Initiatives

- Other fraud/crimes

- Systemic Implications Report

Convictions/pleas/

pretrials

Cases

closed

Key program

results

314

* This does not include hurricane relief cases. See chapter 5 for these cases.

Region 1

7%

Region 3

15%

Region 2

9%

Region 4

7%

Region 11

(Disaster Relief Oversight)

%(N/A)*

Region 5

12%

Region 6

10%

Region 7-8

9%

Region 9-10

31%

Chart 2.2: Percentage of OIG public and Indian housing closed investigation

cases during this reporting period

Chapter 2: HUD’s Public and Indian Housing Programs
             

             

35

Public Housing Authority Theft/Embezzlement

VA Construction Company, a Housing Authority of the City of Danbury (Danbury) contractor, was

ordered to pay Danbury $1.5 million in a civil judgment filed in Connecticut Superior Court, Danbury, CT.

VA Construction Company failed to perform on its Danbury public housing construction contract.



Carl Payne, the former executive director for the Harrisburg Housing Authority (HHA) and president and

chief executive officer for the now-defunct Greater Harrisburg Community Credit Union (HCCU), pled

guilty in U.S. District Court, Harrisburg, PA, to conspiracy to defraud HUD and making false statements.

Payne and unnamed conspirators created documents to obstruct a grand jury investigation into the diversion

of $500,000 in HHA funds to HCCU. A subsequent HUD OIG audit revealed that $834,969 in HHA funds

was diverted to HCCU without authorization or disclosure.



William Porfilio, doing business as Eastern Electronics & Security, Inc., a former Springfield Housing

Authority (SHA) contractor, pled guilty in U.S. District Court, Springfield, MA, to conspiracy to commit

wire fraud. Porfilio obtained more than $500,000 in SHA contracts after he paid bribes to and installed

electronic systems in the homes of previously sentenced SHA executive director Raymond Asselin and others.



Former Tampa Housing Authority (THA) Section 8 counselor Calvin

Coleman and six fictitious THA landlords were each indicted in U.S. District

Court, Tampa, FL, for conspiracy to steal government funds, theft of

government funds, or theft concerning programs receiving Federal funds. In

addition, former THA Section 8 counselors Mario Lovett and Carlton Miles and

nine fictitious THA landlords each pled guilty to conspiracy to steal government

funds, theft of government funds, or committing program fraud. Coleman and

others allegedly and Lovett, Miles, and others admittedly conspired and used the

THA computer system to fraudulently generate and obtain $455,168 in THA

housing contract payments they were not entitled to receive.



David Baker, the Scranton Housing Authority (SHA) executive director, was

indicted in U.S. District Court, Scranton, PA, for misusing his position and

obstructing and impeding the performance of Federal auditors; making and using

false documents; misapplying Federal funds; wire fraud; and influencing,

obstructing, and impeding the due administration of justice during a Federal grand

jury investigation. Baker allegedly misused his position, threatened an

independent auditor, retaliated against cooperating SHA employees, made false

Copyright, 2007. The Tampa

Tribune - Tampa, FL.

Reprinted with permission.

Chapter 2: HUD’s Public and Indian Housing Programs
             

             

36

statements to HUD, used SHA funds without authorization, and placed ineligible family members and friends

into SHA subsidized housing units. HUD's losses are estimated at $300,000.



Margaret Fletcher, the former Fulton County Housing Authority (FCHA) executive director; her

daughter, Rita Stapleton, the former FCHA acting executive director; and former FCHA contract auditor

Margaret Pryor were each charged in U.S. District Court, Harrisburg, PA, with misprision of a felony, conflict

of interest, or submitting fictitious financial reports to HUD. Fletcher allegedly participated and allowed

relatives to participate as landlords in the FCHA Housing Choice Voucher program, used FCHA funds for

unauthorized administrative expenses, and awarded FCHA contracts to Stapleton. Stapleton allegedly

participated as a landlord in the FCHA Housing Choice Voucher program, fraudulently accepted FCHA

contracts, and obtained FCHA funds for fabricated vacation hours. Pryor allegedly falsified her employing

firm and submitted false FCHA annual financial reports to HUD. HUD's losses are estimated at $238,000.



Rebecca Sargeant, a former Springfield Housing Authority (SHA) accounts receivable clerk, was sentenced

in U.S. District Court, Springfield, IL, to 13 months incarceration and 3 years supervised release and ordered

to pay SHA $168,000 in restitution for her earlier guilty plea to theft of government funds. Sargeant prepared,

endorsed, and negotiated $168,000 in SHA checks for her personal use without authorization.



Lupe Pacheco, a former Region VI Housing Authority (Region VI) Section 8 supervisor, was sentenced in

Chavez County District Court, Roswell, NM, to 4 years incarceration and 5 years supervised probation and

ordered to pay Region VI $147,600 in restitution for her earlier guilty plea to embezzlement. Pacheco entered

fictitious tenant and landlord information into the Region VI computer system, obtained $146,700 in

fraudulent Region VI housing contract payments, and used the bogus Region VI housing contract payments

for personal expenditures.



Susan Wyatt, the former Homerville Housing Authority (HHA) executive director, was sentenced in U.S.

District Court, Homerville, GA, to 14 months incarceration and 3 years supervised release and ordered to pay

HUD $110,418 in restitution for her earlier guilty plea to embezzlement. Wyatt embezzled $110,418 in

HHA funds for her personal use.



Robert Newell, the former governor for the Passamaquoddy Tribe Indian Township Reservation

(Passamaquoddy), a HUD-funded Indian tribal organization, and James Parisi, the former Passamaquoddy

financial officer, were each indicted in U.S. District Court, Bangor, ME, for conspiracy, embezzlement, and

making false statements and claims. From 2003 to 2006, Newell and Parisi allegedly diverted and used more

than $1.7 million in Passamaquoddy funds without authorization. HUD's losses are estimated at $82,000.



Chapter 2: HUD’s Public and Indian Housing Programs
             

             

Chapter 2: HUD’s Public and Indian Housing Programs 37

Pauletta McNabb, the former Lawrence County Housing Authority (LCHA) executive director, was

indicted in U.S. District Court, Cummington, KY, for embezzlement. McNabb allegedly used $71,889 in

LCHA funds for unauthorized credit card purchases and travel advances.



Karen and Anslem Thompson, former employees for the Lukachukai Chapter Veterans Organization

Service Development, Inc., (Lukachukai), a Navajo Housing Authority contractor, each pled guilty in U.S.

District Court, Flagstaff, AZ, to conspiracy to commit embezzlement and theft from an Indian tribal

organization. From May 2000 to November 2002, Karen and Anslem Thompson and others embezzled

$65,000 in Lukachukai funds for their personal use.



George Green, the former Union County Housing Authority (UCHA) executive director, was arrested and

charged in Eighth Judicial Circuit Court, Lake Butler, FL, with committing an organized scheme to defraud in

excess of $50,000. From November 2002 to March 2006, Green allegedly received UCHA funds for

fabricated work and vacation hours, directed UCHA personnel to perform services at private residences during

UCHA work hours, diverted UCHA assets for his personal use, expended UCHA funds for unauthorized

expenditures, and created fraudulent UCHA rental records for relatives and friends. HUD's losses are

estimated at $57,499.



Betty Trent, the former Brooksville Housing Authority (BHA) executive director, was sentenced in U.S.

District Court, Tampa, FL, to 2 years incarceration and ordered to pay HUD $23,000 in restitution for her

earlier conviction of conspiracy to defraud the U.S. Government, wire fraud, theft concerning programs

receiving Federal funds, embezzlement of public money, making false claims and statements, and falsification

of Federal records in an investigation. Trent and previously sentenced BHA project manager Jo Ann Bennett

created fraudulent invoices and embezzled more than $40,000 in BHA funds.



Frank Giannoccaro, a former Rochester Housing Authority (RHA) contractor and owner of Giannoccaro

Plumbing and Construction, Inc., was sentenced in U.S. District Court, Rochester, NY, to 2 years probation

and ordered to pay HUD $10,838 in restitution for his earlier guilty plea to theft of government funds.

Giannoccaro submitted more than $36,000 in fraudulent work orders and completion certifications to RHA.



Rosemary Kappes, the former Housing Authority of Salt Lake City (HASLC) executive director, pled

guilty in U.S. District Court, Salt Lake City, UT, to health care fraud. Kappes reimbursed HASLC $22,000

and was sentenced to one day probation and ordered to perform 10 hours of community service. Kappes used

$22,000 in HASLC funds to obtain health insurance benefits for her former spouse.


             

             

38

Robbie Dudley, a former St. Louis Housing Authority (SLHA) employee, entered into a pretrial diversion

agreement filed in U.S. District Court, St. Louis, MO, and was sentenced to 12 months supervised release, was

barred from working any job with a fiduciary responsibility, and agreed to pay SLHA and an elderly tenant

$4,759 in restitution. Dudley stole SLHA tenant payments and transferred funds from an elderly tenant's

bank account for her personal use.



Brent Honore, owner of Honore Construction Company, pled guilty in U.S.

District Court, New Orleans, LA, to misprision of a felony and was sentenced to 2

years probation and fined $5,000. Honore paid bribes for construction invoice

approvals to previously sentenced James Lozano, a former project manager for

Columbia Highlands Company, a Housing Authority of New Orleans

subcontractor.



Benny Ramos, a City of Paterson (Paterson) Section 8 program deputy

director, was indicted in U.S. District Court, Newark, NJ, for attempting to extort

money under color of official right and accepting cash to influence and reward.

Princess Reaves, a Paterson deputy court administrator; Victor Ortiz, a Paterson

housing inspector; and Mark Hooks, a City of Passaic (Passaic) employee, each

pled guilty to soliciting and accepting bribes, attempting to extort money under

color of official right, or accepting corrupt payments. In addition, eight Paterson,

Patterson Housing Authority, or Passaic County Water Commission employees

were collectively sentenced to more than 4 years and 10 months incarceration, 5

months home confinement, 4 years supervised release, and 13 years probation and

fined $10,900 for their earlier guilty pleas to interfering with commerce by threat

or violence, unlawfully accepting property of another, conspiracy to defraud the

U.S. Government, or attempting to extort money under color of official right.

Ramos allegedly and the remaining defendants admittedly solicited and accepted

bribes from an unnamed conspirator in exchange for steering Section 8 tenants to

specific properties, expediting building inspections, or rejecting tenant complaints

filed in municipal court.

Rental Assistance Fraud

Budimir Radojcic, owner of B&B Properties II, Inc., a Chicago Housing Authority (CHA) Section 8

landlord, and Suzana Radojcic, Mirjana Omickus (Radojcic), Christa Patterson, and Mark Helfand were each

charged in Cook County Circuit Court, Chicago, IL, with organizing a continuing financial crimes enterprise,

financial institution fraud, conspiracy to commit a financial crime, forgery, theft, money laundering, and wire

and mail fraud. Budimir Radojcic and the above defendants allegedly conspired and purchased rental

properties, converted the properties into condominiums, fraudulently sold the properties to straw buyers who

obtained conventional mortgage loans, conveyed the properties to a land trust without lender approval, and

obtained more than $700,000 in CHA housing contract payments they were not entitled to receive.



Chapter 2: HUD’s Public and Indian Housing Programs

Copyright, 2008.

The Times-Picayune -

New Orleans, LA.

Reprinted with

permission.
             

             

Chapter 2: HUD’s Public and Indian Housing Programs 39

Twelve Miami-Dade Housing Authority

(MDHA) Section 8 or Housing Choice

Voucher program participants employed by

local governmental agencies were each indicted

in Eleventh Judicial Circuit Court, Miami, FL,

for committing public assistance fraud and grand

theft. In addition, 11 MDHA Section 8

or public housing tenants and two registered

sex offenders and unauthorized MDHA residents

were arrested on probable cause for committing

public assistance and organized fraud, grand

theft, and conspiracy. The above defendants

allegedly failed to report income, assets,

unauthorized residents, or subleasing of their

subsidized units on MDHA certifications and

collectively obtained about $443,571 in MDHA

housing assistance they were not entitled to

receive.



Thirteen former Las Vegas Housing Authority (LVHA) Section 8 tenants and a former LVHA landlord

were charged in Clark County Justice Court, Las Vegas, NV, with theft by misrepresentation, obtaining money

under false pretenses, or attempted theft. In addition, former LVHA Section 8 tenants Lonnie Brown and

Israel Bonilla Hernandez each pled guilty to attempted theft. Brown and Hernandez admittedly and the

remaining defendants allegedly failed to report income, accurate household compositions, familial

relationships, or their criminal histories on LVHA certifications and collectively obtained $368,684 in

LVHA housing assistance they were not entitled to receive.



Eleven Cuyahoga Metropolitan Housing Authority (CMHA) Section 8 landlords and 17 Section 8 tenants

were each charged in Cuyahoga County Court of Common Pleas, Cleveland, OH, with theft and tampering

with records. The above defendants allegedly failed to report income, assets, unauthorized residents, deceased

tenants, or the transfer of property ownership on housing certifications and obtained $280,000 in CMHA

Copyright, 2008. The Miami Herald - Miami, FL.

Reprinted with permission.

Copyright, 2008. The Plain Dealer - Cleveland, OH. Reprinted with permission.
             

             

40

housing assistance or housing contract payments they were not entitled to receive. In addition, Section 8

landlord Tawonna Banks pled guilty to committing forgery and theft, and former Section 8 tenant Elaine

Pritchett was sentenced to 6 months home confinement and 3 years probation and ordered to pay CMHA

$39,300 in restitution for her earlier guilty plea to committing theft. Banks fraudulently used an alias to

obtain a conventional mortgage loan on property chartered to CMHA, leased the property to a CMHA

Section 8 tenant who was related, failed to report her familial relationship on housing certifications, and

obtained $25,500 in housing contract payments she was not entitled to receive. Pritchett failed to report her

ownership interest in her CMHA subsidized property and obtained $39,300 in housing assistance she was not

entitled to receive. Collectively, the above defendants caused HUD losses of $344,800.



Fifteen San Bernardino County Housing Authority (SBHA) Housing Choice Voucher program

participants were charged in San Bernardino County Superior Court, Victorville, CA, with obtaining aid by

misrepresentation and perjury. The above defendants allegedly failed to report unauthorized residents on

SBHA certifications and obtained $275,083 in SBHA housing assistance they were not entitled to receive.



Eleven former Columbus Metropolitan Housing Authority (Columbus) Section 8 tenants were indicted in

U.S. District Court, Columbus, OH, for making false statements. The above defendants allegedly failed to

report income, employment, or assets on housing certifications and obtained about $170,000 in Columbus

housing assistance they were not entitled to receive. In addition, former Section 8 tenants Velvet Wyche, also

known as Velvet Young, and Vellena Johnson were each indicted for committing theft and tampering with

records, and former Section 8 tenant Veronica Silverthorn was sentenced to 12 months incarceration and 5

months probation and ordered to perform 100 hours of community service and pay HUD $19,698 in

restitution for her earlier guilty plea to theft. Wyche and Johnson allegedly and Silverthorn admittedly failed

to report income, accurate household compositions, or their ownership interest in their Columbus subsidized

property and obtained $79,698 in housing assistance they were not entitled to receive. Collectively, the above

defendants caused HUD losses of $249,698.



Laurie Harris, Andrea Marks, and Shakisha Tracy, former New York City Housing Authority (NYCHA)

Section 8 tenants, were each sentenced in U.S. District Court, New York City, NY, for their earlier guilty pleas

to theft of government funds. Collectively, the above defendants were sentenced to 6 months home

confinement and 8 years probation and ordered to pay NYCHA $145,871 in restitution. Harris, Marks, and

Tracy failed to report income on NYCHA certifications and obtained $145,871 in NYCHA housing assistance

they were not entitled to receive.



Lizbeth Valerio, a former Chelsea Housing Authority (CHA) public housing tenant, was arrested after her

indictment in U.S. District Court, Boston, MA, for mail fraud and aggravated identity theft. From 1993

through 2000, Valerio allegedly used a stolen identity to earn income and obtain assets, failed to report income

Chapter 2: HUD’s Public and Indian Housing Programs
             

             

41

or assets on CHA or other certifications, and obtained $118,117 in HUD-funded CHA housing assistance

and $148,126 in other housing assistance and benefits she was not entitled to receive.



Mayra Montano, a former Islip Housing Authority (IHA) Section 8 tenant, was sentenced in Suffolk

County Superior Court, Central Islip, NY, to 5 years probation and ordered to perform 840 hours of

community service and pay HUD and others $150,000 in restitution for her earlier guilty plea to grand

larceny. Montano paid the restitution before sentencing to preclude the seizure of her property in an asset

forfeiture proceeding. Montano failed to report her ownership interest in her IHA subsidized property and

obtained $107,000 in IHA housing assistance she was not entitled to receive.



Peter Ojo, a former housing employee for the City of Hawthorne; Titi Sanusi, Olga Yancor, and Josue

Verona, former Hawthorne Housing Authority (HHA) Section 8 tenants; and Deborah Dauda, a fabricated

dependent of Sanusi, were each charged in Los Angeles County Superior Court, Hawthorne, CA, with

committing grand theft; grand theft of personal property; perjury by declaration; attempting to file false or

forged instruments; or obtaining money, labor, or property by false pretenses. Ojo allegedly assisted Sanusi in

fraudulently obtaining HHA housing assistance, Dauda allegedly falsely claimed to be a dependent of Sanusi,

and Yancor and Verona allegedly failed to report income or assets on HHA certifications. Collectively, the

above defendants obtained more than $101,797 in HHA housing assistance they were not entitled to receive.



Quaneshia Holden, a former Housing Authority for the City of Los Angeles (HACLA) Section 8 tenant,

and Armen and Artashes Gasparian were each charged in Los Angeles County Superior Court, Los Angeles,

CA, with attempting to file false or forged instruments or conspiracy. In addition, Karine Gasparian and

Mercy Stringfield, former HACLA Section 8 tenants, were each sentenced for their earlier guilty pleas to

welfare fraud, perjury, or grand theft. Karine Gasparian was sentenced to 3 years probation and ordered to

perform 452 hours of community service and pay HACLA $34,342 and other agencies $52,251 in restitution,

and Stringfield was sentenced to 3 years incarceration and ordered to pay HACLA $55,269 and other victims

$245,833 in restitution. Holden and Armen and Artashes Gasparian allegedly and Karine Gasparian and

Stringfield admittedly conspired to hide assets; used fictitious names; or failed to report income, unauthorized

residents, or their criminal histories on HACLA certifications and collectively obtained $101,011 in HACLA

housing assistance they were not entitled to receive.



Ten Scranton Housing Authority (SHA) public housing or Housing Choice Voucher program participants

were each charged in Lackawanna County District Court, Scranton, PA, with tampering with public records

and unsworn falsifications. The above defendants allegedly failed to report income on SHA certifications and

collectively obtained more than $101,000 in SHA housing assistance they were not entitled to receive.



Chapter 2: HUD’s Public and Indian Housing Programs
             

             

42

Five former DuPage Housing Authority (DHA) Section 8 tenants were charged in DuPage County Circuit

Court, Wheaton, IL, with theft by deception and forgery. The above defendants allegedly failed to report

income on DHA certifications and collectively obtained about $100,000 in DHA housing assistance they were

not entitled to receive.



Cheryl Smith, a former Housing Authority of the County of Santa Clara (HACSC) Section 8 tenant, was

sentenced in U.S. District Court, San Jose, CA, to 3 years probation and ordered to pay HUD $19,779 in

restitution for her earlier guilty plea to making false statements to HUD. In addition, former HACSC

Housing Choice Voucher program participant Laura Rivas was sentenced to 9 months incarceration

(suspended) and 3 years probation and ordered to pay HACSC $29,127 in restitution for her earlier nolo

contendere plea to grand theft, and former HACSC landlord Tuan Hoang Tran entered into a Program Fraud

Civil Remedies Act (PFCRA) settlement and agreed to pay HUD $27,000. Smith failed to report an

unauthorized resident, Rivas allegedly failed to report an unauthorized resident, and Tran, who previously pled

nolo contendere to grand theft, allegedly failed to report his residency with the Section 8 tenant in his HACSC

subsidized unit. Collectively, the above defendants caused HUD losses of $91,068.



Laurence Reuben and Bedinur Kackarli, Village of Spring Valley (Spring Valley) Section 8 tenants, were

each arrested and charged in Spring Valley Justice or Rockland County District Courts, SpringValley, NY, with

grand larceny. Reuben and Kackarli allegedly failed to report income or provided a false Social Security

number (SSN) on Spring Valley certifications and collectively obtained $76,500 in SpringValley housing

assistance they were not entitled to receive.



Kesha Burton, a former Inglewood Housing Authority (IHA) Section 8 tenant, was charged in Los Angeles

County Superior Court, Inglewood, CA, with committing perjury and grand theft. In addition, Ivette

Longsworth and Julia Jackson, former IHA Section 8 tenants, were each sentenced for their earlier guilty pleas

to filing false or forged instruments or grand theft. Longsworth was sentenced to 5 years probation and

ordered to pay IHA $38,000 in restitution, and Jackson was sentenced to 3 years probation and ordered to pay

the City of Inglewood $25,986 in restitution. Burton allegedly and Longsworth and Jackson admittedly failed

to report income on IHA certifications and collectively obtained more than $76,000 in IHA housing

assistance they were not entitled to receive.



Gloria Hester and Stephanie Alexander, former Joliet Housing Authority (JHA) Section 8 tenants, were

each indicted in Will County Circuit Court, Joliet, IL, for committing theft by deception and forgery. Hester

and Alexander allegedly failed to report income on JHA certifications and collectively obtained $76,000 in

JHA housing assistance they were not entitled to receive.



Chapter 2: HUD’s Public and Indian Housing Programs
             

             

43

Crystal Sylvia and Carol Rapoza, former Falmouth Housing Authority (FHA) Section 8 tenants, were each

charged in Falmouth District Court, Falmouth, MA, with larceny over $250 by false pretenses. Sylvia and

Rapoza allegedly failed to report income or the unauthorized residency of their landlord on FHA certifications

and collectively obtained $73,272 in FHA housing assistance they were not entitled to receive.



Audrea Allen, a former Tampa Housing Authority (THA) Section 8 tenant, was charged in U.S. District

Court, Tampa, FL, with theft of government funds. In addition, Felicia Tucker and Glory Ann Davenport,

former THA Section 8 tenants, were each sentenced for their earlier guilty pleas to public assistance fraud or

theft of government funds. Tucker was sentenced to 48 months probation and ordered to pay THA $11,177

in restitution, and Davenport was sentenced to 18 months incarceration and 36 months supervised probation

and ordered to pay HUD $45,048 and the Social Security Administration (SSA) $34,032 in restitution. Allen

allegedly and Tucker and Davenport admittedly failed to report income, nonresidency in their THA subsidized

property, or an accurate marital status onTHA certifications and collectively obtained $68,728 in THA

housing assistance they were not entitled to receive.



Six former Selma Housing Authority (SHA) Section 8 tenants were indicted in

U.S. District Court, Mobile, AL, for theft of government funds, and two of the above

defendants, Jackie Eaton and Judice Caver, each pled guilty. The above defendants

allegedly and Eaton and Caver admittedly failed to report income on SHA

certifications and collectively obtained about $60,000 in SHA housing assistance they

were not entitled to receive.



Beverly Beard, a former Baltimore County Housing Authority (BCHA) Housing

Choice Voucher program participant, was arrested after her indictment in U.S. District

Court, Baltimore, MD, for making false statements, committing SSA fraud, and aiding

and abetting. From 1995 through January 2007, Beard allegedly failed to report

income; provided a false SSN on BCHA and other certifications; and obtained about

$180,602 in BCHA, SSA, and other benefits she was not entitled to receive. HUD's

loss is estimated at $55,000.



Felicia and Katie McLean, former Frederick City Housing Authority (FCHA)

Section 8 tenants, were each charged in Frederick County Circuit Court, Frederick,

MD, with theft by deception and making false statements. In addition, Kiaeisha Charles,

a former FCHA public housing tenant, was convicted of making false statements and

was sentenced to 3 years incarceration (suspended) and 3 years probation and ordered

Chapter 2: HUD’s Public and Indian Housing Programs

Copyright, 2007. The

Selma Times Journal -

Selma, AL. Reprinted

with permission.
             

             

44 Chapter 2: HUD’s Public and Indian Housing Programs

to pay FCHA $13,782 in restitution. Charles failed and Felicia and Katie McLean allegedly failed to report

income or their criminal histories on FCHA certifications and collectively obtained $54,917 in FCHA

housing assistance they were not entitled to receive.



Esther Arias, a former Revere Housing

Authority (RHA)and Massachusetts Department

of Housing and Community Development

Section 8 tenant; her mother, Ester Percel; and

Edwin Gonzalez were each sentenced in U.S.

District Court, Boston, MA, for their earlier

convictions or guilty pleas to conspiracy, mail and

bankfraud, possession of stolen mail, theft of

government property, identity theft, or filing false

Federal income tax returns. Arias, Percel, and

Gonzalez were collectively sentenced to 138

months incarceration and 9 years supervised

probation and ordered to pay the Internal Revenue

Service (IRS) and the Commonwealth of Massachusetts $204,404 in restitution. The above defendants and

others conspired and stole U.S. mail, used stolen identifications to establish credit card accounts, fraudulently

withdrew funds from bank accounts, filed false Federal income tax returns, or obtained $51,916 in HUDfunded housing assistance they were not entitled to receive.



Tomas Ramirez Alcantar, an undocumented immigrant and former Omaha Housing Authority (OHA)

public housing tenant, was indicted in U.S. District Court, Omaha, NE, for aggravated

identity theft. From June 2003 to November 2007, Alcantar allegedly used a false

identity on OHA certifications and obtained about $46,901 in OHA housing assistance

he was not entitled to receive.



Jamie Ayers and her husband, Lael Williams, a former Section 8 tenant and landlord

through Resources for Communities and People Solutions (RCAP), a HUD-funded

nonprofit housing agency, were each indicted in U.S. District Court, Springfield, MA,

for conspiracy, making false statements and misrepresentations to obtain Social Security

benefits, and theft of government funds. In addition, Jasmine Landrin, a former RCAP

landlord, was sentenced to 2 years probation and ordered to pay RCAP $5,000 in

restitution for her earlier guilty plea to larceny over $250 and making false claims to a

government agency. Landrin admittedly and Ayer and Williams allegedly failed to report

assets or familial relationships on RCAP certifications and collectively obtained $47,666

in RCAP housing assistance they were not entitled to receive.



Copyright, 2007. Lynn Daily Item - Lynn, MA.

Reprinted with permission.

Copyright, 2007. The

Republican - Springfield, MA.

Reprinted with permission.
             

             

Chapter 2: HUD’s Public and Indian Housing Programs 45

Carla Warren, a former Maryland Department of Housing and Community Development (Maryland

HCD) Section 8 tenant, was charged in Maryland District Court, Salisbury, MD, with theft by deception and

making false statements. In addition, former Maryland HCD Section 8 tenants Samantha Boyd, Sonja Cottman,

and Tammy Mitchell were each sentenced for their earlier guilty pleas to making false statements or

committing theft. Boyd was sentenced to 5 years supervised probation and ordered to perform 100 hours of

community service and pay Maryland HCD $13,085 in restitution, and Cottman and Mitchell were each

sentenced to 36 months probation and ordered to pay Maryland HCD $12,000 and $3,445 in restitution,

respectively. Warren allegedly and the remaining defendants admittedly failed to report income on Maryland

HCD certifications and collectively obtained $42,006 in Maryland HCD housing assistance they were not

entitled to receive.



Marie Mosley, a Prince William County Housing and Community Development (Prince William HCD)

Section 8 tenant, pled guilty in U.S. District Court, Alexandria, VA, to theft of government funds. Mosley

failed to report income on Prince William HCD certifications and obtained about $41,000 in Prince William

HCD housing assistance she was not entitled to receive.



Darren Reagan, a former Dallas Housing Authority (DHA) Section 8 landlord, was indicted in U.S.

District Court, Dallas, TX, for theft of public monies. Reagan allegedly failed to report his familial

relationship with the Section 8 tenant in his DHA subsidized property and obtained more than $40,000 in

DHA housing contract payments he was not entitled to receive.



Ali Atia Mohammed and Radieh Al-Safi, Michigan State Housing Development Authority (MSHDA)

Section 8 tenants, were each indicted in U.S. District Court, Detroit, MI, for making false statements and

operating an unlicensed money transmitting business. Mohammed and Al-Safi allegedly operated an

unlicensed money transmitting business from their MSHDA subsidized unit and failed to report business

income or assets on MSHDA, SSA, U.S. Department of Agriculture, or U.S. Department of Health and

Human Services certifications. HUD's loss is estimated at $40,000.



Diane Smith, a former Frederick Housing Authority (FHA) Section 8 tenant, was charged in U.S. District

Court, Baltimore, MD, with theft of government property. Smith allegedly used a fictitious name and

obtained $38,809 in FHA housing assistance at the same time she received and resided in a New York City

Housing Authority subsidized housing unit.



Laketha Lee, a former Sedgwick County Housing Authority (SCHA) Section 8 tenant, was indicted in

U.S. District Court, Wichita, KS, for making false statements. From June 2001 to July 2006, Lee allegedly

failed to report income on SCHA certifications and obtained $36,484 in SCHA housing assistance she was not

entitled to receive.


             

             

46 Chapter 2: HUD’s Public and Indian Housing Programs

Sharlene Zelaya, a Torrance City Housing Authority (TCHA) Housing Choice Voucher program

participant, was convicted in Los Angeles County Superior Court, Torrance, CA, of grand theft and false

representations. Zelaya failed to report income on TCHA certifications and obtained $34,387 in TCHA

housing assistance she was not entitled to receive.



Joanne and Toni Catalini, former Gloucester Housing Authority (GHA) Section 8 tenants, were each

charged in Gloucester District Court, Gloucester, MA, with committing larceny over $250 by false pretenses

and making false claims to a government agency. Joanne and Toni Catalini allegedly failed to report income on

GHA certifications and obtained about $34,000 in GHA housing assistance they were not entitled to receive.



Emad Duar, a San Francisco Housing Authority (SFHA) Section 8 tenant, was sentenced in U.S. District

Court, San Francisco, CA, to 1 year probation for his earlier guilty plea to theft of government funds. Duar

agreed to pay the Housing Authority of the County of Contra Costa (Contra Costa) $4,593 in restitution and

repay SFHA $27,367 for housing assistance overpayments. From October 2001 through November 2003,

Duar failed to report income on SFHA and Contra Costa certifications and obtained about $33,000 in

housing assistance he was not entitled to receive. In addition, Nasir Javaid, a former SFHA landlord, entered

into a PFCRA settlement and agreed to pay HUD $10,000. Javaid, previously sentenced for his guilty plea to

making false statements to HUD, failed to report his familial relationship with the Section 8 tenant is his

SFHA subsidized property.



Theresa Parker, a Nassau County Housing Section 8 tenant and Nassau County Department of Social

Services employee, was arrested and charged in Nassau County District Court, Nassau County, NY, with

grand larceny. Parker allegedly failed to report an accurate household composition on Nassau County

certifications and obtained $30,000 in housing assistance she was not entitled to receive.



Joyce Surley, a former Chesterfield Housing Authority (CHA) Housing Choice Voucher program

participant, pled guilty in U.S. District Court, Richmond, VA, to theft of government property. Surley failed

to report spousal residency or income on CHA or SSA certifications and obtained $30,000 in CHA housing

assistance and $47,000 in SSA benefits she was not entitled to receive.



Elizabeth Ginez, a former Housing Authority of Snohomish County (HASC) Section 8 tenant, was charged

in Snohomish County Superior Court, Everett, WA, with committing theft. Ginez allegedly failed to report

income or assets on HASC certifications, retained rental subsidy payments made to her HASC landlord, and

obtained $29,885 in HASC housing assistance she was not entitled to receive.


             

             

Chapter 2: HUD’s Public and Indian Housing Programs 47

Sara Calman, a Salem Housing Authority (SHA) Section 8 tenant, was charged in Salem District Court,

Salem, MA, with larceny over $250. Calman allegedly failed to report income on SHA certifications and

obtained $28,821 in SHA housing assistance she was not entitled to receive.



Tuawana Colvin, a former Dayton Metropolitan Housing Authority (DMHA) Section 8 tenant, was charged

in Montgomery County Circuit Court, Dayton, OH, with committing theft and falsification in committing

theft. Colvin allegedly failed to report income on DMHA certifications and obtained $28,757 in DMHA

housing assistance she was not entitled to receive.



Michele Verrall, a former Butte Housing Authority (BHA) public housing tenant, was sentenced in U.S.

District Court, Missoula, MT, to 1 year probation and ordered to perform 100 hours of community service

and pay BHA $28,286 in restitution for her earlier guilty plea to making false statements. From January 1999

to May 2006, Verrall failed to report income on BHA certifications and obtained $28,286 in BHA housing

assistance she was not entitled to receive.



Jalenska Cheatham, a Murfreesboro Housing Authority (MHA) Section 8 tenant, pled guilty in U.S.

District Court, Nashville, TN, to making false statements. Cheatham failed to report income, assets, or her

nonresidency in her subsidized unit on MHA certifications and obtained $28,111 in MHA housing assistance

she was not entitled to receive.



Jeanne MacDonald, a former Auburn Housing Authority (AHA) Section 8 tenant, was charged in

Androscoggin County Superior Court, Auburn, ME, with committing theft by deception. From 1998

through 2003, MacDonald allegedly failed to report an unauthorized resident or the resident's income on

AHA certifications and obtained $27,605 in AHA housing assistance she was not entitled to receive.



Stacy Pelham and Damien Byer, former Baltimore Housing Authority (BHA) Housing Choice Voucher

program participants, were each indicted in Baltimore County Circuit Court, Baltimore, MD, for committing

theft and conspiracy to commit theft. From October 2005 to February 2008, Pelham and Byer allegedly failed

to report income, accurate household compositions, or their criminal histories on BHA certifications and

collectively obtained about $25,502 in BHA housing assistance they were not entitled to receive.



Luis Zuniga, a Montgomery County Housing Opportunities Commission (Montgomery County) public

housing tenant, was charged in Montgomery County District Court, Silver Spring, MD, with making false

statements and committing theft by deception. Zuniga allegedly failed to report an unauthorized resident or
             

             

48

the resident's income on Montgomery County certifications and obtained $24,338 in Montgomery County

housing assistance he was not entitled to receive.



Elisa Love and Jeffrey Douglas, Oklahoma Housing Finance Agency (OHFA) Section 8 tenants, were each

charged in Jackson County District Court, Altus, OK, or Carter County District Court, Ardmore, OK, with

obtaining money by false pretenses. Love and Douglas allegedly failed to report income on OHFA

certifications and collectively obtained $23,430 in OHFA housing assistance they were not entitled to receive.



Kathy Carpenter, a former Isothermal Planning and Development Commission (Isothermal) Section 8

tenant, and Doyle Shuford were each indicted in North Carolina Superior Court, McDowell County, NC,

for fraudulent misrepresentations. Carpenter allegedly failed to report Shuford's residency on Isothermal

certifications and obtained $23,034 in Isothermal housing assistance she was not entitled to receive.



Elaine Whitehair, a former Westminster Housing Authority (WHA) Housing Choice Voucher program

participant, was charged in Carroll County District Court, Westminster, MD, with theft by deception and

making false statements. Whitehair allegedly failed to report an accurate household composition or the

criminal histories of unauthorized residents on WHA certifications and obtained $21,600 in WHA housing

assistance she was not entitled to receive.



Shareese Holston, a Chicago Housing Authority (CHA) public housing tenant and Cook County Sheriff's

Department correctional officer, was sentenced in U.S. District Court, Chicago, IL, to 5 years probation and

ordered to pay HUD $21,177 in restitution for her earlier guilty plea to making false statements. Holston

failed to report income on CHA certifications and obtained $21,000 in CHA housing assistance she was not

entitled to receive.



Brian and Robert Booker, a fictitious Cook County Housing Authority (CCHA) Section 8 landlord and

tenant, were each sentenced in Cook County Circuit Court, Chicago, IL, for their earlier guilty pleas to theft.

Brian Booker was sentenced to 20 days incarceration and 2 years probation and ordered to pay CCHA $21,000

in restitution, and Robert Booker was sentenced to 2 years probation. Brian Booker created a fictional

landlord to accept CCHA housing contract payments for property he owned and occupied, and Robert Booker

fraudulently obtained CCHA Section 8 tenant status, signed false CCHA certifications, and enabled Brian

Booker to obtain $21,000 in CCHA housing contract payments he was not entitled to receive.



Michael Brown, a Fairfax County Department of Housing and Community Development (Fairfax HCD)

Housing Choice Voucher program participant, was arrested and charged in Fairfax County Court, Fairfax, VA,

with obtaining housing assistance under false pretenses. Brown allegedly failed to report an unauthorized

Chapter 2: HUD’s Public and Indian Housing Programs
             

             

Chapter 2: HUD’s Public and Indian Housing Programs 49

resident or his income and registered sex offender status on Fairfax HCD certifications and obtained $19,371

in Fairfax HCD housing assistance he was not entitled to receive.



Anetra Chisholm, a former Charlotte Housing Authority (CHA) Section 8 tenant, was sentenced in

Mecklenburg County Superior Court, Charlotte, NC, to 60 months probation and ordered to pay CHA

$18,718 in restitution for her earlier guilty plea to obtaining property by false pretenses. Chisholm failed to

report income on CHA certifications and obtained $18,718 in CHA housing assistance she was not entitled to

receive.



Ammita Nichols and Nyya Archer, former Durham Housing Authority (DHA) Section 8 tenants, were

each sentenced in Durham County District Court, Durham, NC, for their earlier guilty pleas to obtaining

property by false pretenses. Nichols was sentenced to 18 months probation and ordered to pay DHA $11,744

in restitution, and Archer was sentenced to 45 days incarceration and 24 months probation and ordered to pay

DHA $5,000 in restitution. Nichols and Archer failed to report income on DHA certifications and

collectively obtained more than $18,000 in DHA housing assistance they were not entitled to receive.



John Pecor, a former Barre Housing Authority (BHA) Section 8 tenant, was arrested and indicted in U.S.

District Court, Burlington, VT, for making false statements. From July 2003 to August 2006, Pecor allegedly

failed to report income or an accurate household composition on BHA certifications and obtained $18,000 in

BHA housing assistance he was not entitled to receive.



Sarah Shepard, a former Housing Authority of the County of Los Angeles (HACOLA) Section 8 tenant,

was charged in Los Angeles County Superior Court, Los Angeles, CA, with filing a false or forged instrument.

Shepard allegedly failed to report an unauthorized resident or the resident's registered sex offender status on

HACOLA certifications and obtained more than $17,767 in HACOLA housing assistance she was not

entitled to receive.



Sheridan Murray, an unauthorized tenant in a Housing Authority of Kansas City (HAKC) subsidized unit,

was indicted in U.S. District Court, Kansas City, KS, for making false statements, conspiracy, theft of

government funds, and money laundering. Between March 2000 and October 2007, Murray failed to report

his unauthorized residency or income on HAKC certifications and obtained $16,782 in HAKC housing

assistance he was not entitled to receive.



Bonnie Thomas, a former King County Housing Authority (KCHA) Section 8 tenant, and Terrell Dorsey,

an unauthorized resident with Thomas, were each sentenced in King County Superior Court, Seattle, WA, for

their earlier guilty pleas to committing theft. Thomas and Dorsey were each fined $500 and sentenced to 2
             

             

50

and 4 months home confinement with electronic monitoring, respectively. From 2003 to 2005, Thomas

failed to report Dorsey's residency or income on KCHA certifications and obtained $16,680 in KCHA

housing assistance she was not entitled to receive.



Jesenia Sosa, a former City of Buenaventura Housing Authority (CBHA) Housing Choice Voucher

program participant, pled guilty in Ventura County Superior Court, Ventura, CA, to committing grand theft

and welfare fraud. Sosa was sentenced to 150 days incarceration and 3 years probation and ordered to pay

CBHA $16,193 in restitution. From January 2004 to December 2006, Sosa failed to report income or an

accurate household composition on CBHA certifications and obtained $16,044 in CBHA housing assistance

she was not entitled to receive.



Ismael Cruz, a former Rochester Housing Authority (RHA) Section 8 landlord, was sentenced in U.S.

District Court, Rochester, NY, to 2 years probation, ordered to pay HUD $15,810 in restitution, and fined

$5,025 for his earlier guilty plea to creating false documents. Cruz fraudulently certified a Section 8 tenant in

his RHA subsidized property and obtained $15,810 in RHA housing contract payments for property he leased

to others. Cruz was also suspended from procurement and nonprocurement transactions as a participant or

principal with HUD and throughout the Executive Branch of the Federal Government pending the outcome

of criminal proceedings or any related debarment actions.



Biata Jones and Rickisa Garner, former Sacramento Housing and Redevelopment Agency (SHRA) public

housing or Housing Choice Voucher program participants, were each charged in Sacramento County Superior

Court, Sacramento, CA, with committing grand theft or perjury. Jones and Garner allegedly failed to report

income or nonresidency in their subsidized units on SHRA certifications and collectively obtained $15,620 in

SHRA housing assistance they were not entitled to receive.



Erin Morse-Wright, a former North Las Vegas Housing Authority (North LVHA) Section 8 tenant, was

charged in Clark County Justice Court, Las Vegas, NV, with theft by misrepresentation. From June 2005

through May 2007, Morse-Wright failed to report income on North LVHA certifications and obtained about

$15,402 in North LVHA housing assistance she was not entitled to receive.



Ten Puerto Rico Department of Housing Administration public housing tenants were arrested and

indicted in U.S. District Court, Trujillo Alto, PR, for conspiracy to possess and possession of firearms in

relation to narcotics trafficking offenses; conspiracy to possess with intent to distribute controlled substances;

and possession with intent to distribute heroin, crack cocaine, cocaine, and marijuana. The above defendants

allegedly conspired with others and participated in known gang activities, including the possession of firearms

and possession and distribution of heroin, cocaine, crack cocaine, and marijuana. HUD's losses are not yet

determined.



Chapter 2: HUD’s Public and Indian Housing Programs
             

             

Chapter 2: HUD’s Public and Indian Housing Programs 51

Robyn Fain, a Weber County Housing Authority (WCHA) Housing Choice Voucher program

participant, was arrested and charged in Weber County Court, Ogden, UT, with possession of heroin with the

intent to distribute. During her arrest, Louie Ash, an alleged unauthorized tenant in Fain's WCHA subsidized

unit, was arrested for harboring a fugitive. HUD's losses are not yet determined.



Manuel Rodriguez, a Housing Authority for the City and County of Fresno (Fresno) Section 8 landlord,

was charged in Fresno County Superior Court, Fresno, CA, with committing arson, insurance fraud, perjury,

and grand theft. Rodriguez allegedly started a fire in a property he owned and leased to Fresno, fraudulently

filed an insurance claim for fire damages, and provided false information on Fresno certifications. HUD's

losses are not yet determined.



Dora Rodriguez, a Nassau County Housing Authority (NCHA) Section 8 tenant, was arrested and charged

in Hempstead District Court, Mineola, NY, with soliciting and accepting bribes. Rodriguez allegedly posed as

a Section 8 broker and solicited and accepted bribes from prospective NCHA Section 8 tenants.

FedRent Initiative

Since 1996, HUD OIG has reported material weaknesses in HUD's internal controls over rental housing

assistance payments. GAO in January 2001 added HUD's rental housing assistance programs to its list of

federal programs at high risk of fraud, waste and abuse. In late 2000, HUD's Office of Policy Development

and Research completed a study that found that 60 percent of all subsidy determinations were in error, and

estimated $2 billion in net annual overpayments and $3.2 billion in gross annual improper payments. Some of

this was the result of tenants' underreporting of their income, on which subsidies are based. HUD's various

rental housing assistance programs represent HUD's largest program area, with more than $26 billion in total

payments in fiscal 2004, serving more than 4.8 million low-income families, administered by more than 4,100

public housing agencies and 22,000 private housing owners and management agents. In fiscal 2007, HUD

spent about $27 billion to provide rent and operating subsidies that benefited more than 4 million households.

In an effort to combat administrative overpayments and tenant fraud, HUD and HUD OIG commenced

"Operation FedRent," a joint effort to address rental assistance fraud involving Federal employees. Operation

FedRent compares HUD tenant data to current and retired Federal employee information maintained by the

U.S. Office of Personnel Management. After the comparison, an income eligibility determination is made,

and SSNs for family members six years of age and older are verified. If a discrepancy exists, an investigation is

opened, and appropriate administrative or legal actions are initiated to collect any overpaid housing assistance.

Results of Operation FedRent during this semiannual reporting period are described below.

Tanya Blaylock, Cheryl Esters, Bonita Fisher, Michelle Parker, and Mary Beth Sabala, former Dallas

Housing Authority (DHA) Section 8 tenants and current or former employees of the IRS, the U.S.

Department of Veterans Affairs (VA), the U.S. Department of Homeland Security, or the U.S. Department of

Agriculture, were each indicted in U.S. District Court, Dallas, TX, for theft of government funds. The above

defendants allegedly failed to report income on DHA certifications and collectively obtained $147,344 in

DHA housing assistance they were not entitled to receive.


             

             

52

Denise Davis, a former Newark Housing Authority (NHA) Section 8 tenant and legal assistant for the New

Jersey U.S. Attorney's Office, was indicted in U.S. District Court, Newark, NJ, for theft of public money,

making false statements to HUD, and criminal forfeiture. From April 1985 to December 2005, Davis

allegedly failed to report income on NHA certifications and obtained about $130,553 in NHA housing

assistance she was not entitled to receive.



Lauton Joshua, a former San Francisco Housing Authority (SFHA) Section 8 tenant and U.S. Army

employee, and her grandmother, former SFHA landlord Helen Lowe, each pled guilty in U.S. District Court,

San Francisco, CA, to making false statements. From August 1998 to December 2006, Joshua and Lowe failed

to report income, assets, or their familial relationship on SFHA certifications and collectively obtained about

$127,000 in SFHA housing assistance they were not entitled to receive.



Vera Carter, Vivian Lollis, Birdie Jackson, Wyvonia Ware, and June Bly, Housing Authority of the City of

Los Angeles (HACLA) Section 8 tenants and employees of the VA or the U.S. Postal Service (USPS), were each

indicted in U.S. District Court, Los Angeles, CA, for making false statements. The above defendants allegedly

failed to report income on HACLA certifications and obtained $110,000 in HACLA housing assistance they

were not entitled to receive.



Sonya Reshard, a Housing Authority for the County of Los Angeles (HACOLA) Section 8 tenant and

USPS employee, was indicted in U.S. District Court, Los Angeles, CA, for making false statements. Reshard

allegedly failed to report income on HACOLA certifications and obtained $76,340 in HACOLA housing

assistance she was not entitled to receive.



Gloria Jackson, a Long Beach Housing Authority (LBHA) Section 8 tenant and VA employee, was

indicted in U.S. District Court, Long Beach, CA, for making false statements. Jackson allegedly failed to

report income on LBHA certifications and obtained about $75,788 in LBHA housing assistance she was not

entitled to receive.



Marjorie Chatman, a former Richmond Housing Authority (RHA) Section 8 tenant and SSA employee,

was sentenced in U.S. District Court, Oakland, CA, to 6 months home confinement with electronic

monitoring and 3 years probation and ordered to pay RHA $64,452 in restitution for her previous guilty plea

to theft of government funds. From April 1997 through November 2006, Chatman failed to report income on

RHA certifications and obtained $64,452 in RHA housing assistance she was not entitled to receive.



Antionette Love and Taazamisha Bender, Compton Housing Authority (CHA) Section 8 tenants and

USPS employees, were each indicted in U.S. District Court, Los Angeles, CA, for making false statements.

Chapter 2: HUD’s Public and Indian Housing Programs
             

             

Chapter 2: HUD’s Public and Indian Housing Programs 53

The above defendants allegedly failed to report income on CHA certifications and collectively obtained about

$61,000 in CHA housing assistance they were not entitled to receive.



Tracie Coleman, a former Housing Authority of Kansas City (HAKC) Section 8 tenant and IRS employee,

was charged in Jackson County District Court, Kansas City, MO, with theft by deception. In addition,

Brenda Houston, a former HAKC Section 8 tenant and IRS employee, pled guilty to theft of public money

and property. From 2001 through 2005, Coleman allegedly and Houston admittedly failed to report income

on HAKC certifications and collectively obtained $53,143 in HAKC housing assistance they were not entitled

to receive.



Shellette Jackson, a former Washington, DC, Housing Authority (DCHA) Section 8 tenant and U.S.

Department of State employee, was sentenced in U.S. District Court, Washington, DC, to two concurrent

terms of 3 years probation and ordered to perform 100 hours of community service and pay DCHA and the

DC Department of Human Services $50,384 in restitution for her earlier guilty plea to making false claims

and fraudulently obtaining public assistance. Jackson failed to report income on DCHA and other

certifications and obtained $22,705 in DCHA housing assistance and $27,679 in Medicaid, food stamps, and

other benefits she was not entitled to receive.



Lavon Wright, a San Bernardino County Housing Authority (SBCHA) Section 8 tenant and VA

employee, was indicted in U.S. District Court, San Bernardino, CA, for making false statements. Wright

allegedly failed to report income on SBCHA certifications and obtained $22,575 in SBCHA housing

assistance he was not entitled to receive.



Debra Freeman, a former East Chicago Housing Authority (East CHA) public housing tenant and USPS

employee, pled guilty in U.S. District Court, Hammond, IN, to theft of government funds. Freeman failed to

report income on East CHA certifications and obtained about $20,675 in East CHA housing assistance she

was not entitled to receive.



Sahia Seaman, a former Charlotte Housing Authority (CHA) Section 8 tenant and USPS employee, pled

guilty in U.S. District Court, Charlotte, NC, to theft of government funds. Seaman failed to report income

on CHA certifications and obtained $17,572 in CHA housing assistance she was not entitled to receive.



Peter Ruach, a former Portland Housing Authority (PHA) public housing tenant and USPS employee, was

indicted in U.S. District Court, Portland, ME, for making false statements and theft of government property.

From November 2004 through September 2005, Ruach allegedly failed to report income on PHA and other
             

             

54 Chapter 2: HUD’s Public and Indian Housing Programs

certifications and obtained $4,686 in PHA housing assistance and $3,242 in welfare and food stamp benefits

he was not entitled to receive.



Willie Ann Ford, a Texoma Council of Government Housing Authority (Texoma) Section 8 tenant and VA

employee, was indicted in U.S. District Court, Bonham, TX, for making a false statement. Ford allegedly

failed to report income on Texoma housing certifications and obtained $2,154 in Texoma housing assistance

she was not entitled to receive.

Fugitive Felon Initiatives

Enacted into law in 1996, Section 903 of Public Law 104-193, "Elimination of Housing Assistance with

Respect to Fugitive Felons and Probation and Parole Violators," allows for the termination of housing subsidies

for public or assisted housing tenants who flee to avoid prosecution, avoid confinement after conviction of a

felony, or violate conditions of their parole or probation. The law also authorizes Federal, State, and local law

enforcement agencies to exchange information and perform data matches.

OIG supports a Fugitive Felon Initiative (FFI) by matching HUD housing assistance information with

crime data from the National Crime Information Center, U.S. Marshals Service (USMS), and other

participating law enforcement data banks. In addition, OIG special agents actively participate in the USMS

"Operation FALCON," a joint Federal, State, city, and county law enforcement effort to locate and apprehend

fugitive felons wanted for violent crimes. Conducted in most major cities throughout the United States and its

territories, Operation FALCON places a strong emphasis on apprehending fugitive felons involved in gangs,

homicides, sexual assaults, or crimes against the elderly and children. Since the inception of OIG's FFI,

hundreds of cases have been opened and closed, resulting in more than 8,221 arrests. OIG strongly supports

Operation FALCON in an effort to make HUD public and assisted housing a safe place for families to live.

FFI results during this semiannual reporting period are described below.

Stanford Griswold pled guilty in U.S. District Court, Kansas City, MO, to assaulting a Federal officer and

unlawful transportation of a firearm. Griswold assaulted a HUD OIG special agent during Operation

FALCON VI, a USMS action initiated to identify, locate, and apprehend violent fugitives, particularly those

charged with committing sex crimes.



Jimmy Morris, George Snipes, and Antonio Belmont, Atlanta Housing Authority public housing tenants,

were each indicted in Fulton County Superior Court, Atlanta, GA, for failing to accurately report as sex

offenders with the Fulton County Sheriff's Office.



Felicia Clark, Unique Tolliver, and Isharia Holden, Section 8 tenants at Holly Park Apartments, a HUDfunded multifamily housing development, were each arrested in New Orleans, LA, on outstanding State

warrants for battery, possession of narcotics, or other violations.


             

             

Chapter 2: HUD’s Public and Indian Housing Programs 55

Simona Chavez, a Salt Lake City Housing Authority Housing Choice Voucher program participant, was

arrested on an outstanding warrant issued by Utah State Court, Salt Lake City, UT, charging her with

obstruction of justice.



Paul Wood, a West Valley City Housing Authority Housing Choice Voucher program participant, was

arrested on an outstanding warrant issued by Washington County District Court, Salt Lake City,UT, charging

him with criminal nonsupport.

Other Fraud/Crimes

William Ottaviano, an appraiser for Equity Appraisals; Hopeton Bradley, owner of Renhops Management;

Frank Corallo, a loan processor for U.S. Mortgage, Inc.; and Clarbel Morrobel each pled guilty in U.S. District

Court, Newark, NJ, to wire fraud. In addition, Michael Eliasof, owner of Paterson Management, LLC, and

MGE Investments, and Melanie Gebbia each pled guilty to filing a false Federal income tax return or

conspiracy to commit money laundering. The above defendants and others provided false appraisals or loan

documents used by unqualified investors to obtain conventional mortgages, placed the fraudulently

mortgaged properties into the Paterson Housing Authority (PHA) or the City of Paterson (Paterson) Section 8

programs, and obtained PHA or Paterson housing contract payments they were not entitled to receive. Gebbia

also failed to report income she received for preparing false mortgage documents on her Federal income tax

return.



Rex Wetzel, a Blackfeet Housing Authority (BHA) homeownership program participant, was sentenced in

U.S. District Court, Great Falls, MT, to 10 months incarceration and 36 months probation and ordered to pay

BHA $12,000 in restitution for his earlier guilty plea to theft. Wetzel obtained $12,000 from BHA for

downpayment assistance to purchase a home, but instead of purchasing the property, Wetzel forged the seller's

signature, negotiated the check, and used BHA funds for personal expenditures.



Douglas and Cassandra Williams, doing business as Wet National Relocation Services, were each sentenced

in Clark County Justice Court, Las Vegas, NV, for their earlier guilty pleas to conspiracy to commit theft or

theft by misrepresentation. Douglas Williams was sentenced to 12 months incarceration (suspended) and 36

months probation and ordered to pay the victims $14,507 in restitution. Cassandra Williams was sentenced to

48 months incarceration (suspended), 10 days in the Clark County Detention Center, and 36 months

probation and ordered to perform community service and pay the above restitution jointly with Douglas

Williams. From July 2006 through January 2007, Douglas and Cassandra Williams created fictitious Section

8 vouchers and sold them to numerous victims, and Douglas Williams, a former Las Vegas Housing Authority

inspector, conducted unauthorized housing inspections to further their scheme.


             

             

56

David and Anna Delle Donna, the mayor of Guttenberg, NJ, a Guttenberg Planning Board member, and

Guttenberg Housing Authority (GHA) Section 8 landlords, were each indicted in U.S. District Court,

Newark, NJ, for accepting payoffs and filing false Federal income tax returns. David Donna allegedly accepted

payoffs as campaign contributions, and David and Anna Donna allegedly failed to obtain conflict-of-interest

waivers from HUD or report $25,000 in GHA housing contract payments on their 2004 and 2005 Federal

income tax returns.

Systemic Implications Report

Mandating Social Security Numbers and Asset Verifications for Public Housing Tenants

and Landlords

An analysis of subsidized housing investigations conducted in the HUD OIG Chicago region disclosed

numerous flaws in the housing authority SSN and asset verification process. The inaccuracies found included

tenants' ownership of unreported real estate, fictitious landlords, and landlords who provided false

identification information. As a result, HUD OIG's Office of Investigation submitted a systemic implications

report to HUD public and Indian housing staff and recommended that HUD mandate housing authorities to

conduct comprehensive SSN and asset verifications for both tenants and landlords.

In response, HUD incorporated the above recommendation into a proposed rule, "Refinement of Income

and Rent," which is expected to be published by September 30, 2008. This rule will require all current housing

recipients to obtain a valid SSN within one year of final issuance. In addition, the HUD proposed rule, "Assets

26 - 84," prohibits tenants from any ownership interest in real property and requires landlords to provide proof

of property ownership.



Chapter 2: HUD’s Public and Indian Housing Programs
Acronyms List

               

               

Chapter 3

HUD’s Multifamily

Housing Programs
             

             

58

In addition to multifamily housing developments with U.S. Department of Housing and Urban

Development (HUD)-held or HUD-insured mortgages, the Department subsidizes rents for low-income

households, finances the construction or rehabilitation of rental housing, and provides support services for the

elderly and handicapped.

Audits

Strategic Initiative 2: Contribute to the reduction of erroneous

payments in rental assistance

* This does not include hurricane relief audits. See chapter 5 for these reviews.

Region 1

37%

Region 3

13%

Region 2

13%

Region 4

0%

Region 11

(Disaster Relief Oversight)

%(N/A)*

Region 5

0%

Region 6

13%

Region 7-8

0%

Region 9-10

24%

Chart 3.1: Percentage of OIG multifamily housing audit reports

during this reporting period

Chapter 3: HUD’s Multifamily Housing Programs

Key program results Questioned costs Funds put to better use

Audit 8 audits $10 million $729,000

Our

focus

Page 59

Page 59

- Project-based Section 8 contract administrators

- Owner and management agent operations
             

             

Chapter 3: HUD’s Multifamily Housing Programs 59

Project-based Section 8 contract administrators

HUD’s Office of Inspector General (OIG) audited the Los Angeles, CA, Multifamily Hub's monitoring of

its annual contributions contract with its performance-based contract administrator, Los Angeles LOMOD, to

determine whether HUD appropriately monitored LOMOD with respect to the annual contributions

contract.

The Los Angeles Multifamily Hub did not properly monitor its contractor. It did not follow up on the

findings in its 2004 annual compliance review of LOMOD in a timely manner, made inappropriate decisions

regarding the assessment and reversal of disincentives, inappropriately moved LOMOD to the "full

implementation" stage of its contract for two required performance standards without properly supporting the

decision, improperly allowed retroactive rent increases, and did not monitor LOMOD's activities with regard

to the performance standard relating to review of monthly vouchers.

OIG recommended that HUD (1) not reimburse LOMOD for the more than $105,000 in reduction in

incentive fees for those findings in the 2004 compliance review that were improperly reversed, (2) assess more

than $1.3 million in disincentives against LOMOD for incorrect work products, (3) monitor LOMOD's rent

adjustment and contract renewal transactions under standards 3 and 14 until HUD can ensure that LOMOD

has met the acceptable quality level for three consecutive months, and (4) begin monitoring LOMOD under

standard 6 relating to the review, authorization, and payment of monthly vouchers to owners so that it does

not put $13.6 million at risk each month. (Audit Report: 2008-LA-0001)

Owner and Management Agent Operations

HUD OIG audited Century Mission Oaks in San Antonio, TX, to determine whether the project's

owner-manager, Century Mission Oaks GEAC, LLC, complied with HUD's regulatory agreement during

fiscal years 2005 and 2006.

The owner did not support or document that project expenditures were reasonable and necessary. As a

result, the owner could not support more than $2.9 million in expenses, incurred nearly $66,000 in ineligible

expenses, and improperly transferred $197,000 in project funds to an affiliate. Therefore, fewer project funds

were available for mortgage payments, and the risk to the Federal Housing Administration (FHA) insurance

fund was unnecessarily increased. Further, the owner did not ensure that the project's books and records were

properly maintained. Financial records were missing; general ledger entries were incomplete, misclassified,

and/or unsupported; revenues and payroll expenses were overstated; and records were conflicting. As a result,

HUD and other stakeholders could not accurately assess the financial condition of the project.

OIG recommended that HUD require the owner to (1) provide support for or make necessary adjustments

to its financial records to remove $2.7 million in unsupported expenses and expense accruals recorded in its

books, (2) provide support for or reimburse almost $273,000 in unsupported costs, (3) deposit almost $263,000

for the ineligible disbursements and unauthorized transfers into the project's reserve for replacement account,

(4) correct and accurately maintain its accounting records, and (5) implement procedures and controls to

ensure that future disbursements for project expenses comply with requirements. OIG also recommended that

HUD pursue double damages remedies against the responsible parties for the ineligible disbursements and
             

             

60

unauthorized transfers and pursue civil money penalties and administrative sanctions, as appropriate, against

the owner for its part in the regulatory violations identified. (Audit Report: 2008-FW-1008)



HUD OIG audited Vesta Windham Heights, LLC, in Windham, CT, to determine whether the owners

and/or management agent used project funds in accordance with the regulatory agreement.

The owners did not use project funds in accordance with the regulatory agreement. OIG identified

questioned costs and opportunities for funds to be put to better use totaling more than $2.8 million.

Specifically, the owners and management agent (1) used more than $171,000 for services that were

unnecessary and unreasonable to operate and maintain the project when the project was in a non-surplus-cash

position; (2) included unreasonable and unnecessary costs in their cost certification, causing HUD to overinsure

the mortgage by more than $598,000; and (3) repaid more than $800,000 in advances when the project was in

a non-surplus-cash position.

OIG recommended that HUD require the owners to (1) repay the project for the ineligible use of

operating funds for unreasonable and unnecessary costs charged to the project, (2) make a principal payment

or establish an escrow with the lender from nonproject funds to pay down the amount of overinsurance, and

(3) repay the project for ineligible repayments to its related companies. Further, OIG recommended that

HUD pursue sanctions as appropriate against the responsible parties for the unreasonable disbursements

identified. (Audit Report: 2008-BO-1005)



HUD OIG audited Richard A. Hutchens and Associates' (agent) management of the financial operations

of Cayuga Village and Touraine Apartments in Buffalo, NY, to determine whether the agent used project funds

in accordance with its regulatory agreement and HUD requirements.

The agent did not use project funds in accordance with its regulatory agreement and HUD requirements.

Specifically, the agent (1) did not solicit competitive bids or maintain adequate documentation to support

nearly $988,000 in repair and maintenance costs paid to an identity-of-interest company, (2) made more than

$505,000 in unauthorized loans and withdrawals of residual receipts, (3) improperly disbursed nearly $143,000

in project operating funds to pay expenses that were questionable, and (4) did not make a required payment of

nearly $8,000 to the residual receipts account or a required equity payment in a timely manner.

OIG recommended that HUD instruct the agent to develop procedures to ensure compliance with all

terms of its regulatory agreement and require the agent to (1) reimburse the projects for the ineligible costs

associated with unauthorized loans and withdrawals from residual receipts, an improper salary advance, and

excessive fees and (2) submit supporting documentation to justify all unsupported costs and reimburse the

projects from nonproject funds for all amounts determined to be ineligible. (AuditReport: 2008-NY-1002)



HUD OIG audited Vesta Mohegan, LLC, Norwich, CT, to determine whether the owners used project

funds in accordance with their regulatory agreement with HUD.

Chapter 3: HUD’s Multifamily Housing Programs
             

             

Chapter 3: HUD’s Multifamily Housing Programs 61

The owners did not use project funds in accordance with the regulatory agreement. OIG identified

questioned costs and opportunities for funds to be put to better use totaling nearly $1.2 million. Specifically,

the owners (1) used more than $58,000 in project funds for unnecessary and unreasonable operating costs;

(2) included more than $593,000 in unreasonable relocation costs and other questionable costs in the cost

certification, causing the HUD-insured mortgage to be overinsured by more than $341,000; and (3) repaid

nearly $201,000 in member advances when the project was in a non-surplus-cash position.

OIG recommended that HUD require the owners to (1) repay the project for the questioned operating

costs from nonproject funds, (2) make a principal payment or establish an escrow with the lender from nonproject

funds to pay down the amount of overinsurance, and (3) reimburse the project from nonproject fund sources

for the ineligible member advance repayments and remove the unreasonable member advances accrued from

the project's accounting records. (Audit Report: 2008-BO-1004)



HUD OIG audited Elders Place, Incorporated, Philadelphia, PA, to determine whether it administered

project funds in accordance with HUD requirements.

Elders Place, Inc., did not administer project operating funds in accordance with HUD requirements. It

made nearly $310,000 in unsupported disbursements and more than $73,000 in ineligible disbursements

and, thereby, did not sufficiently protect HUD's and the residents' interests in the project.

OIG recommended that HUD direct Elders Place, Inc., to (1) provide documentation to support the

unsupported costs or reimburse the project for any unsupported costs from nonfederal funds; (2) repay the

project from nonfederal funds for the ineligible costs identified by the audit; and (3) develop and implement

controls to ensure that project operating funds are administered in compliance with applicable HUD and

Federal regulations, thereby preventing more than $13,000 from being disbursed improperly over the next

year. OIG further recommended that HUD impose administrative sanctions against Greater Germantown

Housing Development Corporation, the project's sponsor, for violations of the regulatory agreement. (Audit

Report: 2008-PH-1005)



HUD OIG reviewed whether the Phoenix Apartments multifamily project in Concord, CA, used its project

funds in accordance with HUD rules and regulations in response to a Hotline complaint.

The project did not use project funds in accordance with the requirements of its regulatory agreement and

applicable HUD rules and regulations. Specifically, during fiscal years 2004 through 2006 the project used

nearly $90,000 of its funds for unnecessary purposes and did not support the necessity and/or reasonableness

of more than $118,000 spent for the project. OIG also found unsafe conditions, some of which the project's

management ignored for more than two years.

OIG recommended that HUD require the project's owner, Phoenix Apartments, Inc., to (1) repay the

project nearly $90,000 from nonproject funds for the unnecessary expenditures and provide support for the

reasonableness of the funds paid for the unsupported services and goods or repay the project for the

unsupported amount from nonproject funds; (2) immediately obtain the services of a HUD-approved

professional management agent to manage the project and implement policies and procedures for ensuring
             

             

62

that project funds are spent only for reasonable and necessary purposes; and (3) immediately procure repair

services for all of the unsafe conditions and implement adequate policies and procedures for periodic

inspection, reporting, repair, and followup of any conditions that may pose a hazard to the project's residents

or visitors. (Audit Report: 2008-LA-1006)



Chapter 3: HUD’s Multifamily Housing Programs
             

             

Chapter 3: HUD’s Multifamily Housing Programs 63

Investigation

Some investigations discussed in this report were generated from leads provided by HUD multifamily

housing program staff or conducted jointly with Federal, State, and local law enforcement agencies. The

results of various significant investigations are described below.

Strategic Initiative 2: Contribute to the reduction of erroneous

payments in rental assistance

$

recovered

Admin/civil

actions

Investigations 47 $1 million 50

Our

focus

Page 64

Page 65

Page 67

- Theft/embezzlement

- Rental assistance fraud

- Other fraud/crimes

Convictions/pleas/

pretrials

Cases

closed

Key program

results

36

* This does not include hurricane relief cases. See chapter 5 for these cases.

Region 1

9%

Region 3

16%

Region 2

20%

Region 4

2%

Region 11

(Disaster Relief Oversight)

%(N/A)*

Region 5

13%

Region 6

22%

Region 7-8

11%

Region 9-10

7%

Chart 3.2: Percentage of OIG multifamily housing closed investigation

cases during this reporting period
             

             

64

Theft/Embezzlement

Martin Shulman, owner of S.G.B. Management, Inc. (SGB), a management agent for six HUD-insured

and subsidized multifamily properties; his wife, Gail Shulman; and SGB office manager Keyetta Williams were

each indicted in U.S. District Court, Cleveland, OH, for equity skimming, theft, money laundering,

obstructing a Federal audit, and mail and wire fraud. The above defendants allegedly claimed nonexistent

tenants and fraudulently obtained more than $1.4 million in HUD housing assistance payments, used about

$1 million in property equity for their personal benefit, and caused HUD losses of more than $5 million after

two FHA-insured mortgages defaulted. Total HUD losses are estimated at $7.4 million.



Frank DeSantis, president of the Community Partnership Development Corporation (Community), a

HUD-funded nonprofit administering a $16.9 million Low Income Housing Preservation and Resident

Homeownership Act grant, pled guilty in U.S. District Court, Los Angeles, CA, to obstructing a Federal audit.

DeSantis provided fraudulent time sheets and fictitious certifications in an attempt to support nearly

$3.2 million in overstated and unapproved construction fees paid to Community employees during the

rehabilitation of three multifamily housing developments.



Wynee Joyner, a principal of the National Housing Group, Inc. (NHG), a HUD contract oroverseeing the

management and maintenance of HUD-owned multifamily housing developments, was arrested and charged

in U.S. District Court, New York City, NY, with conspiracy and mail fraud. Joyner allegedly instructed NHG

employees to submit about $500,000 in false claims to HUD in an effort to circumvent NHG contract terms

and obtain HUD reimbursements before paying third-party vendors.



Iris Baez, the former board president for Co-Op City, a HUD-funded 15,372 unit multifamily housing

development, and Nickhoulas Vitale, also known as Nicky Vitale, a former Co-Op City painter, each pled

guilty in U.S. District Court, New York City, NY, to bribery. Baez was sentenced to 6 months incarceration

Chapter 3: HUD’s Multifamily Housing Programs

Copyright, 2007. The Daily News - New York City, NY. Reprinted with permission.
             

             

Chapter 3: HUD’s Multifamily Housing Programs 65

and 1 year supervised release and ordered to forfeit $10,000. Baez obtained $10,000 in kickbacks after she and

others awarded a $3.5 million painting contract to Vitale’s current employer, Stadium Interior Painting.



Kimberly Campbell, a former administrative assistant for Kenneth Court Apartments, a HUD-funded

multifamily housing development, and Antwan Busby, Ottis Levine, and Lionell Bradley were each charged in

Thirteenth Judicial Circuit Court, Tampa, FL, with conspiracy to commit armed robbery, committing a

robbery with a firearm, armed burglary of a dwelling with a firearm, aggravated battery with a deadly weapon,

grand theft, or possession of a firearm during the commission of a felony. The above defendants allegedly

conspired and stole about $3,000 in utility assistance payments from Kenneth Court Apartments.



Joseph Driscoll, a former maintenance director for ARCO Management Company, a former HUD

contractor overseeing the management and maintenance of HUD-owned multifamily housing developments,

pled guilty in U.S. District Court, New York City, NY, to committing mail fraud. Driscoll and others

submitted fake bids to facilitate a HUD-funded window replacement contract award to a specific company.

Rental Assistance Fraud

Six former Section 8 tenants at Mandela Homes Apartments, a HUD-funded multifamily housing

development, were each charged in U.S. District or Boston Municipal Courts, Boston, MA, or West Roxbury

District Court, Jamaica Plain, MA, with making false statements, theft of public money, larceny over $250 by

a single scheme, misuse of a Social Security number, or identity theft. The above defendants allegedly failed to

report income, assets, or accurate identification information on housing certifications and collectively

obtained $252,126 in housing assistance they were not entitled to receive.



Hong Le, a Section 8 tenant at El Rancho Verde Apartments, a HUD-funded multifamily housing

development, and An Quang Nguyen, an unauthorized resident with Le, each pled nolo contendere in Santa

Clara County Superior Court, San Jose, CA, to grand theft. Nguyen was sentenced to 6 months incarceration,

ordered to pay HUD $80,356 in restitution, and fined $450. Le allegedly failed to report Nguyen's residency

on housing certifications and obtained $80,356 in housing assistance she was not entitled to receive.



Five Section 8 tenants at Coral Gardens Apartments (Coral Gardens), a HUD-funded multifamily

housing development in Homestead, FL, were arrested on probable cause for committing public assistance

fraud, possession of marijuana with the intent to distribute, or outstanding warrants. The above defendants

allegedly failed to report income or unauthorized residents on housing certifications and obtained about

$49,583 in housing assistance they were not entitled to receive. In addition, MariaVazquez, a former Coral

Gardens Section 8 tenant, was sentenced to 2 years supervised probation, ordered to pay HUD $10,386 in

restitution, and fined $498 for her previous conviction of public assistance fraud and grand theft, and Ernesto
             

             

66 Chapter 3: HUD’s Multifamily Housing Programs

Rodriguez, an uncooperative witness in the Vazquez trial, was arrested on an outstanding warrant for failure to

appear, trespassing, and disorderly conduct. Collectively, the above defendants caused HUD losses of $59,979.



Jeri Hill, a former Section 8 tenant at Glenridge Cooperative Apartments, a HUD-funded multifamily

housing development, was indicted in U.S. District Court, San Francisco, CA, for making false statements to

HUD. From January 2003 through October 2007, Hill allegedly failed to report income on housing

certifications and obtained about $56,000 in housing assistance she was not entitled to receive.



Kathy Lovett, a former Section 8 tenant at Woodridge Homes Apartments, a HUD-funded multifamily

housing development, was charged in Lawrence District Court, Lawrence, MA, with larceny over $250. From

January 1999 to November 2006, Lovett allegedly failed to report income on housing certifications and

obtained $47,600 in housing assistance she was not entitled to receive.



Eddie Speller, a New York City Department of Housing and Preservation Development Section 8 tenant

and New York City police officer, pled guilty in U.S. District Court, New York City, NY, to theft of

government funds. Speller failed to report income on housing certifications and obtained about $30,000 in

housing assistance he was not entitled to receive.



Nikita Nelson-Smith, a former Section 8 tenant at Watts Arms I, a HUD-funded multifamily housing

development, was charged in Los Angeles County Superior Court, Los Angeles, CA, with filing a false or

forged instrument. Nelson-Smith allegedly failed to report assets or her nonresidency in her subsidized unit on

housing certifications and obtained more than $17,946 in housing assistance she was not entitled to receive.



Ellen Yoder, a former Section 8 tenant at Hillside Village Apartments, a HUD-funded multifamily housing

development, was sentenced in U.S. District Court, Williamsport, PA, to time served and 12 months

supervised release and ordered to pay HUD $8,090 in restitution for her earlier guilty plea to making false

statements to HUD. Yoder concealed her criminal history on housing certifications and obtained $8,090 in

housing assistance she was not entitled to receive.



Rachel Klotz, a manager for Park Seven Apartments (Park Seven), a HUD-funded multifamily housing

development, was indicted in Johnson County District Court, Olathe, KS, for making false writings. In

addition, Gayle Rapp, a former Park Seven Section 8 tenant, entered into a pretrial diversion agreement and

was sentenced to 12 months probation, was ordered to pay court costs of $323, and agreed to pay Park Seven

$1,206 in restitution. Klotz allegedly failed to report tenant income on HUD certifications in an attempt to
             

             

Chapter 3: HUD’s Multifamily Housing Programs 67

allow tenants to maintain their housing assistance eligibility, and Rapp admittedly failed to report income on

housing certifications and obtained $1,206 in housing assistance she was not entitled to receive. Collective

HUD losses are not yet determined.

Other Fraud/Crimes

Patrick Crislip, a former HUD multifamily construction analyst, was sentenced in U.S. District Court,

Kansas City, KS, to 5 months incarceration, 5 months home detention, and 2 years probation and ordered to

pay HUD $30,000 in restitution for his earlier guilty plea to conspiracy to conceal a conflict of interest.

Crislip entered into a renovation and cleaning contract and obtained $49,900 from Alpha Property

Management, Inc., a HUD multifamily management agent for Sunflower Park and Silver City Apartments, at

the same time he conducted official HUD rehabilitation inspections at the multifamily housing developments

identified above.


               

               

Chapter 4

HUD’s Community

Planning and Development

Programs
             

             

70

The Office of Community Planning and Development (CPD) seeks to develop viable communities by

promoting integrated approaches that provide decent housing, suitable living environments, and expanded

economic opportunities for low- and moderate-income persons. The primary means toward this end is the

development of partnerships among all levels of government and the private sector. In addition to the audits

and investigations described in this chapter, the U.S. Department of Housing and Urban Development, Office

of Inspector General (HUD OIG), has conducted numerous outreach efforts (see chapter 7, page 121).

Audits

Strategic Initiative 3: Contribute to the strengthening of communities

* This does not include hurricane relief audits. See chapter 5 for these reviews.

Region 1

11%

Region 3

6%

Region 2

27%

Region 4

28%

Region 11

(Disaster Relief Oversight)

%(N/A)*

Region 5

0%

Region 6

11%

Region 7-8

0%

Region 9-10

17%

Chart 4.1: Percentage of OIG community planning and development

audit reports during this reporting period

Chapter 4: HUD’s Community Planning and Development Programs

Key program results Questioned costs Funds put to better use

Audit 18 audits $62.7 million $3.4 million

Our

focus

Page 71

Page 74

Page 76

- Community Development Block Grant programs

- HOME Investment Partnerships program

- Supportive Housing Program grants
             

             

Chapter 4: HUD’s Community Planning and Development Programs 71

OIG audited the Community Development Block Grant (CDBG) program, the HOME Investment

Partnerships Program (HOME), and the Supportive Housing Program grants. While OIG's objectives varied

by auditee, the majority of the reviews were to determine whether the grant funds were administered for

eligible activities and that the auditee met program objectives. The following section illustrates the audits

conducted in the community planning and development area.

Community Development Block Grant Programs

HUD OIG, Washington, DC, audited HUD's administration of the CDBG program and concluded that

HUD's performance measurements did not demonstrate how grantees were increasing neighborhood health

and attaining the primary CDBG objective of developing viable urban communities. In addition, while HUD's

monitoring of CDBG entitlement communities identified numerous grantee deficiencies and offered

meaningful recommendations for corrective actions, grantee performance had often not improved over time.

OIG recommended that HUD implement a system to measure the impact of its monitoring efforts for

improving grantee performance and effectiveness. Specifically, OIG recommended that HUD (1) design a

performance measurement system that allows it to report meaningful outcomes and not just outputs,

(2) design a ranking and rating system for individual grantees so that HUD and its stakeholders can identify

and address both good and poor performance, (3) establish controls to ensure that monitoring efforts

emphasize high-impact activities so that recommendations can focus on promoting improvements in program

participants' performance, and (4) assess the impact of its monitoring on performance and increase incentives

to improve grantee performance and compliance by using all of its available sanction authority. (Audit Report:

2008-NY-0001)



HUD OIG audited the CDBG program administered by the City of Ft. Lauderdale, FL, and found that

the City did not provide or maintain adequate supporting documentation to demonstrate that CDBG

activities met national objectives. As a result, it had no assurance that more than $5 million in expended

CDBG funds achieved the intended national objective or met program requirements. The City's CDBG

financial information did not agree with information reported to HUD. The City also failed to report

program income to HUD for one project and improperly allocated 100 percent of its vehicle expenditures to

the program without adequate supporting documentation demonstrating that the expenses were accurate and

program related.

OIG recommended that HUD require the City to (1) provide documentation to support that program

requirements were followed and national objectives were met or reimburse its program $2.3 million from

nonfederal funds; (2) provide an action plan for development of land parcels to include how national objectives will be achieved and, if not developed within 90 days, reimburse its program the greater of $2.6 million or

the fair market value of the property from nonfederal funds; (3) maintain documentation to support that

program requirements were followed and national objectives were met to allow more than $722,000 in unused

funds to be put to better use by ensuring that the City effectively uses these funds for the intended clientele; (4)

update, implement, and enforce written monitoring policies and procedures to ensure effective performance

and compliance with Federal regulations for meeting CDBG national objectives; (5) reconcile its Financial

Accounting Management Information System with the HUD Integrated Disbursement and Information
             

             

72

System and notify HUD of the adjustments; (6) report rental and interest income for one project as program

income; and (7) reimburse the program nearly $99,000 from nonfederal funds, since there is no assurance that

vehicle use was program related. (Audit Report: 2008-AT-1005)



HUD OIG audited the City of Chicopee, MA's administration of its CDBG program and found that the

City violated conflict-of-interest regulations, resulting in ineligible projects being funded and the improper use

of more than $1.1 million in CDBG funds. The City also did not properly support that more than $4.3

million in CDBG-funded public facilities and improvement activities met the low-to-moderate-income

benefit requirements and did not adequately monitor or provide oversight of CDBG funds provided for public

works and facilities activities.

OIG recommended that HUD (1) require the City to repay the $1.1 million in ineligible costs from

nonfederal sources; (2) pursue all applicable administrative sanctions against the City, including debarring

individuals involved in the decision to expend these funds; (3) ensure that the City provides supporting

documentation for the unsupported costs or take administrative action requiring repayment of amounts not

adequately supported or determined to be ineligible; (4) require the City to establish written oversight policies

and procedures that meet HUD requirements for awarding, administering, and monitoring CDBG program

funds; and (5) require the City to repay from nonfederal funds the amount of CDBG program funds spent on

prohibited or unsupported maintenance and repair activities. (Audit Report: 2008-BO-1001)



HUD OIG audited the CDBG program administered by the City of West Palm Beach, FL, and found

that the City was deficient in contract administration, monitoring, maintaining supporting documentation,

and reporting program income and failed to ensure that more than $2.7 million in CDBG funds was used in

compliance with program requirements and to meet national objectives. In addition, the City awarded

contracts without full and open competition; did not prepare a cost analysis before awarding the contracts; and

did not maintain documentation supporting that contractors were not debarred, suspended, or ineligible. As

a result, it could not ensure that more than $1.2 million in contracts it awarded provided full and open

competition and that the costs were reasonable.

OIG recommended that HUD require the City to (1) provide documentation supporting that HUD

requirements were followed and national objectives were met for 27 CDBG activities or reimburse the

program more than $2.7 million from nonfederal funds; (2) develop, implement, and enforce more

comprehensive written policies and procedures that comply with HUD requirements; (3) provide supporting

documentation to justify the eligibility and reasonableness of nearly $625,000 disbursed for the four contracts

or reimburse the program from nonfederal funds; and (4) ensure that Federal procurement requirements are

incorporated into City policies and procedures, implemented, and enforced. (Audit Report: 2008-AT-1004)



HUD OIG audited the Municipality of Canovanas, PR's CDBG program and concluded that the

Municipality's financial management system did not fully comply with applicable HUD requirements. It did

not support the allowability of more than $885,000 in program disbursements, could not account for more

than $501,000 in CDBG receipts, allowed the use of more than $23,000 for ineligible program expenditures,

Chapter 4: HUD’s Community Planning and Development Programs
             

             

Chapter 4: HUD’s Community Planning and Development Programs 73

and did not disburse CDBG program funds in a timely manner. In addition, the Municipality improperly

used CDBG funds for new housing construction and lacked adequate documentation to support program

accomplishments. Therefore, the related program expenditures of more than $36,000 are ineligible, and more

than $324,000 is considered unsupported pending an eligibility determination by HUD. The Municipality

also awarded six contracts without following HUD procurement requirements, did not support the

reasonableness of more than $109,000 in CDBG disbursements, and paid more than $70,000 for excessive

expenditures.

OIG recommended that HUD require the Municipality to (1) repay more than $59,000 in ineligible

expenditures and the $70,000 in excessive costs; (2) provide all supporting documentation showing the

appropriateness and eligibility of more than $1.82 million in CDBG disbursements; (3) develop and

implement an internal control plan; and (4) ensure that CDBG expenditures are properly accounted for,

reconciled with HUD's disbursement system, and in compliance with HUD requirements. (Audit Report:

2008-AT-1002)



A HUD OIG review of the City of Jacksonville, FL/County of Duval, FL's CDBG program did not

identify reportable conditions for most of the cited objectives. However, the City needs to improve controls to

ensure proper justification for sole source procurements and that subrecipients only use program funds for

specific City-approved activities. OIG identified subrecipients that did not properly document or justify sole

source procurements totaling $156,000 for four purchases and one instance in which the City reimbursed a

subrecipient nearly $35,000 for costs that were not for the activity component the City approved. As a result,

the City could not adequately support the reasonableness of $156,000 in CDBG disbursements and the nearly

$35,000 paid for costs not associated with the City-approved activity.

OIG recommended that HUD require the City to establish and implement controls to ensure compliance

with requirements for sole source purchases and that subrecipients are only reimbursed for costs incurred for

activities approved in their funding request. The City should be required to reimburse the program from

nonfederal funds for any portion of the nearly $191,000 that it cannot support as being reasonable and having

been incurred for the City-approved activity. (Audit Report: 2008-AT-1003)

Lower Manhattan Development Corporation

During the reporting period we continued our series of Congressionally mandated audits of the Lower

Manhattan Development Corporation’s (Corporation) administration of the Community Development Block

Grant Disaster Recovery Assistance funds provided to the State of New York following the September 11,

2001, terror attack. The State of New York designated the Corporation to administer $2.783 billion of the

$3.483 billion in Community Development Block Grant Disaster Recovery Assistance funds to assist with the

recovery and revitalization of lower Manhattan. The two audits completed during this reporting period are

summarized as below.

HUD OIG audited the Lower Manhattan Development Corporation (Corporation), New York, NY,

regarding its administration of the Community Development Block Grant Disaster Recovery Assistance funds

provided to the State of New York following the September 11, 2001, terror attack. The objectives of the audit

were to determine whether the Corporation (1) disbursed the funds in accordance with the guidelines
             

             

74 Chapter 4: HUD’s Community Planning and Development Programs

established under HUD-approved partial action plans, (2) expended the funds for eligible administration and

planning expenses in accordance with applicable laws and regulations, and (3) had a financial management

system in place that adequately safeguarded the funds and prevented misuse.

During the audit period, the Corporation disbursed approximately $132.7 million of the $2.783 billion in

appropriated funds. The Corporation generally disbursed the funds in accordance with HUD-approved

action plans, expended funds for eligible administration and planning expenses in accordance with applicable

laws and regulations, and maintained a financial management system that adequately safeguarded funds and

prevented misuse. However, an internal control weakness existed in the management of grant repayments in

the Employment Training Assistance Program. The subrecipient that administered the program credited 10

grant recipient repayments to the wrong HUD grant and did not return recovered funds to HUD's Line of

Credit Control System in a timely manner.

OIG recommended that HUD require the Corporation to strengthen controls to ensure that future grant

repayments to the Employment Training and Assistance Program are properly recorded and credited to the

correct HUD grant. (Audit Report: 2008-NY-1004)



HUD OIG performed its ninth audit of the Lower Manhattan Development Corporation's (Corporation)

administration of the $2.783 billion in Community Development Block Grant Disaster Recovery Assistance

funds provided to the State of New York following the September 11, 2001, terrorist attacks on the World

Trade Center in New York City, NY.

The Corporation's final action plan did not always specify projects to which funds were to be allocated or

identify alternative funding sources for some of the activities. While it was prepared and approved at a time

when the operation of the Corporation as a going concern was in question, which may have resulted in the lack

of specifics on certain projects, this question appears to have been resolved for the immediate future.

Consequently, the lack of specifics in the final action plan will lessen HUD's ability to evaluate the extent to

which future disbursements comply with the approved final action plan. In addition, the lack of information

on the nonfederal sources of funding for the World Trade Center Memorial/Museum project lessens HUD's

assurance that the funds will be available and that the project will be successfully completed as envisioned.

OIG recommended that HUD instruct the Corporation to (1) provide specifics for HUD review for the

activities and outcomes expected as a result of the funding approved in the final action plan for the affordable

housing, economic development, education, and transportation projects and (2) identify the amount of

private and nonfederal public resources that are reasonably expected to be available for the completion of the

World Trade Center Memorial/Museum to ensure that the allocated Federal funds will sufficiently leverage

those additional resources. (Audit Report: 2008-NY-0801)

HOME Investment Partnerships Program

HUD OIG audited the City of New York, NY's Department of Housing Preservation and Development

to evaluate its administration of the HOME program. The City generally committed and disbursed HOME

funds in accordance with program regulations; however, there were weaknesses in its monitoring procedures.

As a result, the City lacked assurance that its community housing development organizations were properly
             

             

Chapter 4: HUD’s Community Planning and Development Programs 75

organized and operated effectively, data in HUD's Integrated Disbursement and Information System

accurately reflected the status of its HOME funds, and HOME-funded projects being monitored met the

statutory eligibility requirements throughout the affordability periods. In addition, while the City met its

HOME match requirements and reported a substantial balance of match contributions made in excess of the

required amounts, erroneous calculations of the match contributions resulted in ineligible match being carried

forward as a balance for use in future years.

OIG recommended that HUD require the City to (1) implement procedures to recertify its community

housing development organizations and evaluate their performance, (2) enter information into HUD's

Integrated Disbursement and Information System to reflect the current status of seven old projects that have

not been closed out, (3) implement procedures to ensure that all completed projects are monitored for the

specified affordability period, (4) remove $34.1 million in ineligible match from its 2007 HOME match

report, and (5) establish procedures to accurately report the value of match contributions for each of its

programs. (Audit Report: 2008-NY-1003)



HUD OIG audited Fulton County, GA's HOME program. The County did not properly manage its

HOME program and consistently failed to follow requirements. There was more than $6.4 million in HOME

funds that involved questioned costs, funds that were subject to recapture, and a missing match contribution.

The County did not (1) properly commit more than $2.57 million and was in danger of losing more than

$828,000 that was approaching the commitment deadline, (2) prepare or maintain proper documentation to

support project approvals, (3) ensure the eligibility of more than $1.26 million, (4) ensure proper support for

more than $1.55 million, (5) effectively address project delays, (6) maintain records to support affordable

housing compliance, (7) contribute more than $226,000 in HOME match funds, (8) maintain proper

performance records, (9) conduct or document project monitoring, and (10) properly maintain and manage

program staff.

OIG recommended that HUD take appropriate administrative action against the County official

responsible for most significant reported violations and require the County to properly support or repay more

than $4.28 million in questioned costs, recapture more than $2.16 million because of program violations, and

determine whether the County has the capacity to continue administering the HOME program. If the County

does not have the capacity to continue administering the program, HUD should terminate the program and

reallocate the County's HOME funding to other properly performing participating jurisdictions. If the

County is allowed to continue administering the program, HUD should require it to establish and implement

proper controls and procedures to ensure compliance with program requirements, obtain periodic reviews of

the program by its internal audit division to confirm compliance, and provide copies of the reports to HUD

with actions taken to correct reported violations. (Audit Report: 2007-AT-1006)



HUD OIG audited the City of Los Angeles, CA, Housing Department's single-family and small

multifamily property rehabilitation programs funded by the HOME program. The Department did not

always (1) ensure that HOME-assisted rehabilitation work met all applicable construction standards and/or

was complete, (2) have complete documentation of income eligibility and property values, and (3) report the

status of its program activities to HUD in the required timeframes.
             

             

76 Chapter 4: HUD’s Community Planning and Development Programs

OIG recommended that HUD require the Department to (1) develop, maintain, and implement

operating policies, procedures, and controls regarding loan approvals, construction standards, and monitoring

and ensure accurate and timely reporting of program data to HUD; (2) certify that construction deficiencies

and incomplete construction work for the properties identified have been repaired or completed in accordance

with the applicable standards or reimburse the HOME trust fund for the uncertified portion of the $1.2

million disbursed for these properties; and (3) inspect and certify 35 properties rehabilitated under the asset

control agreement or reimburse the HOME trust fund for the uncertified portion of the $4.8 million

disbursed for these properties. (Audit Report: 2008-LA-1004)



HUD OIG audited the City of Huntington Park, CA's HOME program and found that the City did not

ensure that its contracted community and housing development organization supported homebuyers' income

eligibility with appropriate source documentation and that income determinations were performed in

accordance with HOME requirements. It also did not ensure that HOME affordability requirements were

imposed with the sale of a property. As a result, nearly $297,000 in HOME funds was unsupported, and

income eligibility determinations did not meet HOME requirements. In addition, more than $204,000

earned from the sale of the property was retained by the community and housing development organization

for 4 years and had not been applied to another project.

OIG recommended that HUD require the City to (1) provide documentation to support the eligibility of

homebuyers with unsupported income or repay the HOME funds that were spent on the project, (2) establish

procedures with sufficient detail to ensure that income determinations are performed consistent with HOME

requirements, and (3) ensure that the future use of proceeds that are retained by a community and housing

development organization are documented in a written agreement. (Audit Report: 2008-LA-1001)

Supportive Housing Program Grants

HUD OIG audited Homes for Life Foundation in Los Angeles, CA, to determine whether the

Foundation applied and tracked its HUD Supportive Housing Program cash match in accordance with

applicable requirements.

The Foundation did not administer its Supportive Housing Program grants in compliance with HUD

requirements. Specifically, it could not adequately support that it met the statutory 25 percent cash match

requirement of more than $389,000 for all 12 grants reviewed. Further, it inappropriately charged nearly

$113,000 in duplicate costs.

OIG recommended that HUD require the Foundation and/or the Los Angeles Homeless Services

Authority to (1) provide adequate supporting documentation to substantiate that the cash match was met or

repay from nonfederal funds more than $2 million in grant funds expended, (2) implement a financial

management system that adequately identifies the source and application of all cash match funds for federally

sponsored activities, (3) support or repay nearly $113,000 in duplicate costs from nonfederal funds, and

(4) establish and implement a cost allocation plan that allocates program expenditures for its multifunded

projects equitably. (Audit Report: 2008-LA-1003)


             

             

Chapter 4: HUD’s Community Planning and Development Programs 77

HUD OIG audited the Community Development Corporation of Brownsville, Inc., Brownsville, TX,

to determine whether the Corporation correctly charged administrative costs to its various Federal funding

sources and whether it used housing counseling grant funds to qualify mortgage applicants instead of

counseling potential homebuyers.

The Corporation incorrectly used part of its housing counseling grant funds for qualifying mortgage

applicants. This condition occurred because the Corporation had a prohibited conflict of interest as it

provided housing counseling, mortgage qualifying, and underwriting services. As a result, it charged ineligible

salaries and unsupported fringe benefits to its grants. In addition, it did not allocate general administrative

costs in proportion to the relative benefits received by the various funding sources or awards. Further, it could

not support a more than $472,000 increase in its building acquisition cost or the $66,000 value assigned to the

land. As a result, it may have overcharged its Federal funding sources or awards by more than $67,000 for

depreciation.

OIG recommended that the Corporation (1) resolve its conflict of interest, repay to HUD more than

$177,000 in ineligible salaries, and support or repay nearly $81,000 in fringe benefits; (2) develop a cost

allocation plan for HUD approval that allocates general administrative expenses relative to the benefits

received by its funding sources or awards; (3) reallocate more than $391,000 in general administrative expenses

in accordance with its cost allocation plan; (4) obtain an appraisal that values the building and land separately

as of the date it purchased the building; and (5) reallocate the correct depreciation. (Audit Report:

2008-FW-1004)



HUD OIG reviewed the Housing Opportunities for Persons with AIDS (HOPWA) grant to the City of

Dallas, TX, to determine whether the City and its program sponsors provided rent, mortgage, and utility

assistance to persons who met program criteria and whether the 2005 and 2006 competitive grants provided

transitional and replacement housing.

Generally, the City complied with program requirements to ensure that it and its program sponsors

provided assistance to eligible persons. However, in violation of the HOPWA grant agreement, two program

sponsors charged nearly $25,000 in ineligible expenses, and one program sponsor did not support nearly

$139,000 in expenses. Further, the City provided almost $2,000 in excess short-term rental, mortgage, and

utility assistance, and several client files lacked adequate supporting documentation.

OIG recommended that HUD require the City to (1) repay more than $26,000 to its HOPWA formula

grant; (2) provide supporting documentation or reimburse its formula grant nearly $139,000; (3) discontinue

cable television payments, which will result in more than $16,000 in formula grant funds being put to better

use; and (3) strengthen controls to better comply with requirements. (Audit Report: 2008-FW-1007)


             

             

78

Inspections and Evaluations

Monitoring of Local Governments under the State CDBG Program

In 2004 and 2005, Congress appropriated more than $4 billion in CDBG funds to States. After

withholding funds reserved for specific areas, 70 percent of the remaining program funds were then allocated

to "entitlement" cities, and 30 percent were disbursed to States for "nonentitlement" areas. Each State and

Puerto Rico, except Hawaii, administers the distribution and oversight of nonentitlement funds to local grant

recipients. This oversight by State agencies includes the monitoring of local grant recipients to determine

program compliance and to prevent and detect fraud.

HUD OIG completed a nationwide inspection of the 2004 and 2005 monitoring of local grant recipients

by State agencies. The results of this inspection showed that almost all of the State agencies conducted on-site

monitoring visits during the 2004 and 2005 program years, State agencies followed basic Federal monitoring

requirements except for the need to ensure timely receipt of single-audit reports from local grant recipients,

and each State agency submitted its annual performance and evaluation report to HUD. Additional

inspection results showed that six State agencies reported that inadequate resources hindered their ability to

monitor local grant recipients, and five of the nine State agencies contacted had issued sanctions against local

grant recipients for their failure to comply with program requirements or achieve program objectives.

To address the inspection results above, HUD OIG recommended that HUD ensure that State agencies

establish a system to monitor their receipt of annual single-audit reports from local grant recipients and assist

the State agencies that reported inadequate staff in developing a plan and methods to effectively use their

available resources. (I&E Report: IED 07 002)



Chapter 4: HUD’s Community Planning and Development Programs
             

             

Chapter 4: HUD’s Community Planning and Development Programs 79

Investigation

Some investigations discussed in this report were generated from leads provided by HUD CPD program

staff or conducted jointly with Federal, State, and local law enforcement agencies. The results of various

significant investigations are described below.

Strategic Initiative 3: Contribute to the strengthening of communities

$

recovered

Admin/civil

actions

Investigations 98 $5.7 million 22

Our

focus

Page 80

Page 85

- Theft/embezzlement

- Other fraud/crimes

Convictions/pleas/

pretrials

Cases

closed

Key program

results

27

* This does not include hurricane relief cases. See chapter 5 for these cases.

Region 1

10%

Region 3

14%

Region 2

24%

Region 4

0%

Region 11

(Disaster Relief Oversight)

%(N/A)*

Region 5

10%

Region 6

21%

Region 7-8

7%

Region 9-10

14%

Chart 4.2: Percentage of OIG community planning and development

closed investigation cases during this reporting period
             

             

80 Chapter 4: HUD’s Community Planning and Development Programs

Theft/Embezzlement

Linda Bevins, the former payroll supervisor for the Crotched Mountain Foundation (Crotched

Mountain), an organization that received HUD CDBG funds, was indicted in U.S. District Court, Concord,

NH, for committing theft from programs receiving Federal funds. From June 2004 through July 2007, Bevins

allegedly diverted and personally used about $1.6 million in Crotched Mountain funds without authorization.

In addition, New Hampshire civil default judgments in the amount of $1.6 million were individually awarded

against Bevins and her daughter, Holly Sears.



Jojuana Meeks, the former executive director for Gary Urban Enterprise Association (Gary Urban), an

organization that received HUD HOME funds, was sentenced in U.S. District Court, Gary, IN, to 71 months

incarceration and 3 years supervised release and ordered to pay the Indiana Attorney General more than $1.1

million and the Internal Revenue Service $89,024 in restitution for her earlier guilty plea to theft of

government funds. Meeks and previously convicted conspirators embezzled more than $1 million in Gary

Urban funds when they obtained excessive wages, misused Gary Urban credit cards, and diverted Gary Urban

funds into their personal bank accounts.



James Hayes, the former treasurer for Love Social Services Center (Love SSC), an organization that

received HUD Economic Development Initiative grants and U.S. Department of Justice funding, was

convicted in U.S. District Court, Anchorage, AK, of conspiracy, misapplication from an organization

receiving Federal funds, money laundering, filing a false Federal income tax return, and committing fraud and

theft. Murilda Hayes, the former executive director for Love SSC, pled guilty to committing theft, fraud,

misapplication from an organization receiving Federal funds, and money laundering. From 2000 through

2005, James and Murilda Hayes embezzled and personally used more than $825,000 in Love SSC funds

without authorization.



Leo Hardy, Jr., and Shirley Hardy Walden, the president and treasurer of Southampton County Assembly

(Southampton), an organization that received HUD HOME funds, were each indicted in U.S. District Court,

Norfolk, VA, for making false statements. Hardy and Walden allegedly used about $150,000 in Southampton

funds for projects not related to HUD programs.



Josh Brown, a building inspector for Golden Triangle Planning and Development District (Golden

Triangle), an organization that administered HUD HOME funds, was sentenced in U.S. District Court,

Jackson, MS, to 6 months home detention and 2 years probation and fined $17,500 for his earlier guilty plea

to conspiracy. Brown and others conspired, embezzled, and personally used $100,000 in Golden Triangle

funds without authorization.


             

             

Chapter 4: HUD’s Community Planning and Development Programs 81

James Fantroy, Sr., the former treasurer for Paul Quinn College Community

Development Corporation (Paul Quinn CDC), an organization that administered a

HUD Historically Black College and University grant, was convicted in U.S. District

Court, Dallas, TX, of committing theft from a program receiving Federal funds. Fantroy

obtained and personally used about $48,000 in Paul Quinn CDC funds without

authorization.



Derrick Ward and Abdullah Aziz were each arrested after their indictments in U.S.

District Court, New York City, NY, for conspiracy to defraud HUD and theft of

government funds. In addition, Michael Calore, the former owner of Via Restaurant,

Inc., pled guilty to theft of government funds, and George Crawford was sentenced to

36 months probation and ordered to pay Empire State Development Corporation

(Empire) $4,569 in restitution, jointly and severally with Ward and Aziz, for his earlier

guilty plea to theft of government funds. Aziz and Ward allegedly and Calore and

Crawford admittedly submitted false applications and collectively obtained $46,463 in

Business Recovery grant funds from Empire, a HUD-funded nonprofit established to

provide assistance to businesses in lower Manhattan after the September 11,2001,

terrorist attacks.



Kenneth Elliott, the former executive director

for Metro Housing Partnership (Metro), an

organization that received HUD HOME funds,

pled guilty in U.S. District Court, Arlington, TX,

to theft from a program receiving Federal funds.

Elliott created bogus invoices and embezzled more

than $42,000 in Metro funds to purchase boats,

vehicles, and other personal use items.



Constance Post, also known as Gerrie Post, the executive director for

the Mount Vernon Urban Renewal Agency (MountVernon) and a

commissioner for the Mount Vernon Department of Planning and

Community Development, organizations that received HUD CDBG

funds, and Wayne Charles, president of the Charles Group and owner of

Micros Only Computer Concepts (Micros), were each indicted in U.S.

District Court, White Plains, NY, for conspiracy to commit mail fraud

and making false statements. Post allegedly awarded $1.1 million in

Mount Vernon computer contracts to Micros without obtaining bids

from others, provided the Charles Group with a $500,000 loan from

Copyright, 2008.

The Dallas Morning

News -Dallas, TX.

Reprinted with

permission.

Copyright, 2008. The Dallas

Morning News - Dallas, TX.

Reprinted with permission.
             

             

82 Chapter 4: HUD’s Community Planning and Development Programs

Mount Vernon funds and failed to disclose the loan in Mount Vernon books and records, and concealed about

$30,000 she personally received from Charles.



Steven Scott, a former City of New Brunswick housing inspector previously sentenced in U.S. District

Court, Newark, NJ, for his guilty plea to theft of public funds, was suspended from procurement and

nonprocurement transactions with HUD and throughout the Executive Branch of the Federal Government

pending the outcome of criminal proceedings or any related debarment actions. Scott used the identification

of another and fraudulently obtained $19,940 in HUD housing rehabilitation grant funds.



Wendell France, a former Baltimore County Housing Authority (BCHA) Housing Opportunities for

Persons with AIDS (HOPWA) Section 8 tenant and BCHA landlord, was sentenced in Baltimore County

Circuit Court, Baltimore, MD, to 1 year incarceration (suspended) and 1 year supervised release and ordered

to pay BCHA $18,659 in restitution for his earlier guilty plea to theft. France failed to report income,

employment, assets, or BCHA housing contract payments on BCHA HOPWA certifications and obtained

$18,659 in BCHA HOPWA assistance he was not entitled to receive.



Ebony Davis, a former case manager for Volusia and Flager Counties AIDS Coalition, an organization

that received HUD HOPWA funds, was sentenced in U.S. District Court, Orlando, FL, to 6 months

incarceration, 3 months home confinement, and 3 years probation and ordered to perform 150 hours of

community service, pay HUD $2,182 in restitution, enter into a drug treatment program, and cooperate in

DNA collection for her earlier guilty plea to embezzlement. Davis falsified HOPWA recipient lease

agreements, generated payments to fictitious landlords, and embezzled more than $11,036 in HOPWA funds.



Copyright, 2008. The Daytona Beach News-Journal - Daytona Beach, FL. Reprinted with permission.
             

             

Chapter 4: HUD’s Community Planning and Development Programs 83

Danny Davis, owner of Gray Home Improvements (Gray) and a former administrator for the Johnson

City Community Planning and Development Department (Johnson CPD), an organization that received

HUD CDBG funds, was charged in Washington County Circuit Court, Johnson City, TN, with committing

theft, forgery, money laundering, and official misconduct. Davis allegedly awarded inflated Johnson CPD

housing rehabilitation contracts to Gray, deposited Johnson CPD funds into his personal bank account, and

personally paid subcontractors to complete Johnson CPD-funded rehabilitations. HUD's losses are not yet

determined.



Keith Woods, the former mayor of Brookshire, TX, and Henry Cheney, the former Brookshire director of

public works, were each indicted in U.S. District Court, Houston, TX, for conspiracy to commit Federal

program fraud and Travel Act violations to promote State bribery. Woods and Cheney allegedly accepted

bribes from a demolition contractor in exchange for city contracts funded with HUD CDBG resources.



William Walker, the former director for both the Neighborhood Preservation and the Housing

Rehabilitation programs in New Brunswick, NJ, organizations that received HUD CDBG and HOME funds,

was charged in a superseding indictment filed in U.S. District Court, Newark, NJ, with conspiracy to extort

under color of law and soliciting and accepting corrupt payments. Walker allegedly accepted $112,500 in

bribes from construction and maintenance companies under contract with both HUD-funded programs

identified above.



Linda Roach, a former supervisory clerk for the New Brunswick Department of Community Planning and

Economic Development (New Brunswick CPED), an organization that received HUD CDBG funds, was

sentenced in U.S. District Court, Newark, NJ, to 5 months incarceration, 5 months home confinement, and

Copyright, 2008. The Houston Chronicle - Houston, TX. Reprinted with permission.
             

             

84

36 months probation for her earlier guilty plea to receiving corrupt payments. Roach accepted cash payments

from New Brunswick CPED contractors in exchange for expedited contract payments.



Frank Rose, the director for the Neighborhood Preservation program in Linden, NJ, an organization that

received HUD CDBG funds; Anthony Rose, the former director for the Linden Department of

Transportation and Parks; and Walter Zawacki, a partner in Zawacki Construction, each pled guilty in U.S.

District Court, Newark, NJ, to mail fraud and filing a false Federal income tax return. From January 1998 to

October 2007, Frank Rose accepted bribes from Zawacki and others in exchange for more than $5 million in

Neighborhood Preservation construction contracts, and Anthony Rose awarded more than $1.3 million in

construction and maintenance contracts to companies he owned.



Matthew Price, the former director for the Florida City Housing and Economic Development, an

organization that received HUD HOME funds, and Jennifer Stimpson, a broker for Venture Mortgage

Investments, each pled guilty in U.S. District Court, Miami, FL, to conspiracy to commit mail and wire fraud.

Price and Stimpson conspired with others and fraudulently obtained mortgage funding from contractors in

exchange for discounted sales of city-owned properties, including a property constructed with HUD HOME

and CDBG funds.



Jose Cipolla and Frank Guido, former contractors previously sentenced in U.S. District Court, Buffalo,

NY, for their guilty pleas to perjury, were each debarred from procurement and nonprocurement transactions

with HUD and throughout the Executive Branch of the Federal Government for 3 years. Cipolla and Guido

paid kickbacks to a City of Rochester rehabilitation specialist in exchange for HUD-funded rehabilitation

contracts.



Richard Goyette, the former mayor of Chicopee, MA, was sentenced in U.S. District Court, Springfield,

MA, to 24 months incarceration, 12 months in a community correction center, and 3 years probation and

ordered to pay the Federal Bureau of Investigation $10,000 in restitution for his earlier guilty plea to extortion.

Chapter 4: HUD’s Community Planning and Development Programs

Copyright, 2007. The Republican - Springfield, MA. Reprinted with permission.
             

             

Chapter 4: HUD’s Community Planning and Development Programs 85

Goyette extorted two $5,000 campaign contributions from a developer under contract with the Chicopee

Office of Economic Development (Chicopee OED), an organization that received HUD CDBG funds, and

in return, Goyette promised to approve, modify, and extend the Chicopee OED contract to benefit the

developer.

Other Fraud/Crimes

James Middleton, the former executive director for Southside Community Development and Housing

Corporation (Southside), an organization that received HUD HOME funds, was sentenced in U.S. District

Court, Richmond, VA, to 3 years probation, ordered to pay the Philip Morris Employees Community Fund

$26,532 in restitution, and fined $1,000 for his earlier guilty plea to mail fraud. Middleton provided

fraudulent applications to private corporations and obtained $300,000 in grants and loans to pay cost overruns

on Southside building projects.


               

               

Chapter 5

Hurricane Relief

Oversight
             

             

88

Investigation cases closed by program area*

Chapter 5: Hurricane Relief Oversight

Community

Planning and

Development

Multifamily

Housing

Public

and Indian

 Housing

Single-Family

 Housing

68

3

12

2

70

60

50

40

30

20

10

0

* Total number of hurricane-related cases, some of which may have been worked in different States due to relocation

of evacuees.

Gulf Coast audit reports isued by location

Entire Gulf

Coast

2

Louisiana

2

Mississippi

1
             

             

Chapter 5: Hurricane Relief Oversight 89

Introduction and Background

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG),

successfully established the Gulf Coast Region Offices of Audit and Investigation in the Gulf Coast disaster

areas to prevent, detect, and combat fraud, waste, and abuse of HUD program disaster funds. HUD received

supplemental appropriations of approximately $20 billion. HUD has approved numerous State action plans

and distributed billions of dollars in the form of HUD Community Development Block Grants (CDBG) for

housing and other needs. In addition, HUD has responsibility for temporary housing assistance for

approximately 45,000 Federal Emergency Management Agency (FEMA) households from the declared

disaster areas under a FEMA interagency agreement in the new Disaster Housing Assistance Program (DHAP).

HUD has also provided a variety of public housing program funds for repair and reconstruction of severely

damaged public housing properties, most notably in Biloxi, MS, and New Orleans, LA.

The Office of Audit (OA) continues to be diligent in its efforts to pursue fraud, waste, and abuse in the

audits of the $20 billion in HUD's emergency supplemental funding provided to the Gulf Coast States. The

Gulf Coast Region OA has completed five audits of the supplemental funding resulting in findings of

questioned costs of more than $16 million. Currently, auditors are evaluating the Housing Authority of New

Orleans (HANO) as part of a congressional request. It should be noted that OA is monitoring the funding

for Louisiana's Road Home program, which exceeds $9 billion, and the amount obligated for Mississippi's

Homeowner Grant Assistance program, which totals $2.5 billion.

The Office of Investigation (OI) has concentrated on hurricane fraud in the Gulf Coast States by focusing

its resources in the recently established Gulf Coast Region, headquartered in New Orleans, LA. The Gulf

Coast Region conducts the majority of HUD OIG's disaster investigations, and a number of HUD OIG field

offices conduct criminal investigations related to Hurricane Katrina fraud throughout the country.

OI has provided training, presentations, and outreach on HUD disaster recovery funding and investigative

matters to prosecutors and law enforcement and State agencies. In the Gulf Coast States, OI has been working

with the State agencies and grantees to implement antifraud measures, which they have used in their disbursement of disaster funds. One example is the State agencies in Louisiana, Mississippi, and Texas, which have

established many fraud controls recommended by OI for their homeowner assistance grant programs. The

Gulf Coast Region is actively participating in the U.S. Department of Justice (DOJ) Hurricane Katrina Fraud

Task Force (HKFTF) in Baton Rouge, LA, which receives approximately 1,000 hotline calls monthly related to

hurricane fraud.

OI monitors and assists with all disaster investigations nationwide. It works closely with OA to coordinate

audits and to monitor and conduct research regarding all HUD disaster program funds. It continues to

implement fraud prevention measures within HUD and in the affected States of the Gulf Coast Region. Most

recently, OI has partnered with the HUD Office of Public and Indian Housing (PIH); the Office of

Multifamily Housing (MH); and the Office of Policy, Development, and Research (PD&R) to identify and

investigate duplicate benefits in HUD and FEMA disaster rental assistance programs.
             

             

90

Hurricane Financial Profiles of HUD Community Development

Block Grant Funds

The following provides a status as of March 31, 2008, of the HUD CDBG disaster funds appropriated to

the five Gulf States and a summary of the homeowners programs for Mississippi and Louisiana. HUD's

distribution of the funds and the receipt and use of the funds by State agencies, contractors, consultants,

homeowners, and evacuees are being tracked and monitored for waste, fraud, and abuse by HUD OIG OA

and OI.

Disaster Community Development Block Grant

States Allocations Disbursements Balance

Alabama

1st & 2nd

supplemental total

$95,613,574 $16,920,445 $78,693,129

Florida

1st & 2nd

supplemental total

$182,970,518 $5,249,718 $177,720,800

Louisiana

1st, 2nd & 3rd

supplemental total

$13,410,000,000 $7,106,085,784 $6,303,914,216

Mississippi

1st & 2nd

supplemental total

$5,481,221,059 $2,005,808,477 $3,475,412,582

Texas

1st & 2nd

supplemental total

$503,194,849 $21,707,968 $481,486,881

Totals $19,673,000,000 $9,155,772,392 $10,517,227,608

Chapter 5: Hurricane Relief Oversight
             

             

Chapter 5: Hurricane Relief Oversight 91

State of Louisiana

The Road Home Program (authorized $9.93 billion; disbursed $4.16 billion)

The Road Home program is the major program set up to rebuild Louisiana's impacted communities.

Devastated communities will be subjected to abandoned homes, clouded land titles, and disinvestments if a

large portion of the financial assistance is not provided to homeowners. Some owner-occupants, however, may

choose none of the basic options to repair, rebuild, or relocate in Louisiana. In these instances, the State will

compensate the homeowner for 60 percent of the home's prestorm value, less insurance and FEMA repair

funds. The State of Louisiana received an additional $3 billion in emergency funding during this period. The

status of the Road Home program is described below.

State of Louisiana homeowner program status

Community Planning and Development

Community Development Fund

The Road Home snapshot

Analysis of the homeowner applications

State of Louisiana

Status as of March 31, 2008

Line items Totals

Total applications received and recorded to date

Closings held

Average award

185,106 (final)

103,377

$58,900

Source of Funds: Emergency Supplemental Appropriations I, II, & III (P.L. 109-148, P.L. 109-234, & P.L. 110-116)

State of Mississippi

Homeowner Grant Assistance Program (authorized $2.5 billion; disbursed $1.5 billion)

The purpose of the Homeowner Grant Assistance program is to provide a one-time grant payment

(maximum $150,000) to eligible homeowners who had suffered flood damage to their primary residence as of

August 29, 2005, from Hurricane Katrina. The Homeowner Grant Assistance program is designed to provide

compensation to those impacted by the hurricane.

Also noted: There is no requirement that the homeowner occupy the property after replacement/

rehabilitation work is completed. After certain deductions, homeowners have complete discretion over the use

of grant funds, as allowable by State and Federal law, as they work through their personal disaster recovery

situation. The status of the Mississippi homeowner program is described below.
             

             

92 Chapter 5: Hurricane Relief Oversight

State of Mississippi homeowner program status

The Homeowner Grant Assistance Program

Snapshot analysis of the homeowner applications

State of Mississippi

Status as of March 31, 2008

Line items Totals

Applications received

Grants paid

Dollar value of grants paid

Average grant paid

31,006

19,786

$1.5 billion

$71,300

Source of Funds: Emergency Supplemental Appropriations I & II (P.L. 109-148 and P.L. 109-234) 96


             

             

Chapter 5: Hurricane Relief Oversight 93

Audit

Emerging Oversight Trends

OA will continue to pursue audits of Louisiana's largest disaster grant program, the Road Home program.

However, auditors are currently, as part of a congressional request, evaluating the Housing Authority of New

Orleans (HANO). In addition, auditors are finishing up an audit of the Road Home program to determine

the impact of the Additional Compensation Grant and the eligibility of its recipients. There are four other

audits planned in addition to the HANO review. One audit will look at the Road Home program (E-grants),

and the others involve Mississippi's small rental program, Texas's homeowner program, and the small business

loan program. The objectives of the planned audits are as follows:

HANO - To determine whether HANO carried out its housing activities in accordance with HUD

requirements, including procurement, Section 8 and public housing activities, and financial condition.

State of Mississippi Small Rental Program - To determine whether controls are adequate to ensure that

funds are only expended for eligible participants and awards are properly calculated.

Louisiana's Road Home Program (E-grants system) - To determine whether E-grants system data

provide results that are accurate and adequately supported.

Economic Development (Small Business Loan Program) - To determine whether duplicate loans

were given on behalf of HUD and the Small Business Administration (SBA). OIG wants to ensure

that HUD loans do not duplicate SBA assistance. OIG is proposing a joint audit review with SBA/OIG.

Texas Homeowner Program - To determine whether controls are in place to ensure that funding isused

for intended purposes and awards are provided to eligible applicants and are properly calculated.
             

             

94 Chapter 5: Hurricane Relief Oversight

Final Audit Products

During this period, OIG issued five audits of the supplemental funding resulting in findings of

questioned costs of more than $16 million. The auditors concentrated their efforts on the community

planning and development programs, as well as some of the public and Indian housing programs during this

period. In one audit of the Louisiana Road Home program, auditors found that the State funded 411

applicants who were coded ineligible or lacking an eligibility determination, resulting in possible overpayment

totaling $15.5 million. The audits completed during this period are summarized as follows:

HUD OIG, Washington, DC, audited HUD's Katrina Disaster Housing Assistance Program (KDHAP)

and Disaster Voucher Program (DVP) administered by public housing agencies to determine whether HUD

(1) properly determined the eligibility of KDHAP/DVP participants and (2) implemented adequate measures

to prevent KDHAP/DVP participants from receiving duplicate housing assistance from other HUD housing

programs.

HUD did not always ensure that only eligible KDHAP/DVP participants received disaster housing

assistance. As a result, as of August 31, 2007, $760,317 in Federal funds had been misspent for 84 KDHAP/

DVP participants who were ineligible for disaster assistance. If ineligible costs continue to be incurred, HUD

could spend an additional $153,808 on ineligible participants from September 2007 to the end of the

program. However, these 84 participants count as less than 1 percent of the total number of participants.

OIG recommended that HUD take appropriate actions deemed necessary to recover or write off the

Federal funds that were misspent on 84 ineligible participants, immediately cease paying funding on the

participants ineligible for KDHAP and/or DVP, and take appropriate actions to remove any other ineligible

participants from the Disaster Information System. (Audit Report: 2008-AO-0001)



HUD OIG audited the performance of the State of Louisiana's Road Home program housing manager,

ICF Emergency Management Services, Baton Rouge, LA, to determine whether ICF provided contract

deliverables in accordance with the terms and conditions of its contract with the State. The State is a CDBG

disaster recovery grantee under the Department of Defense Appropriations Act of 2006.

ICF did not always provide contract deliverables in accordance with the terms and conditions of its

contract with the State, thereby causing the State to reject the deliverables. Specifically, the State rejected 6 of

80 deliverables provided by ICF. Of the rejected deliverables, the homeowner management information

system deliverable was most critical, since it was the core processing mechanism needed for the progress of the

homeowner assistance program. Collectively, the management information system, in conjunction with the

State's perpetual modification requirements to the system, and inadequate monitoring of system modification

requirements during phase 1 of the program contributed to delaying the distribution of grants to eligible

homeowners.

OIG recommended that HUD require the State to set realistic goals for ICF, taking timely appropriate

action against ICF when performance problems arise as stipulated by the contract, and verify whether the State

adequately implemented its new monitoring policies and procedures. (Audit Report: 2008-AO-1001)


             

             

Chapter 5: Hurricane Relief Oversight 95

HUD OIG audited the State of Louisiana's additional compensation grant component of the Road Home

homeowner assistance program, managed by the State's contractor, ICF Emergency Management Services,

LLC, Baton Rouge, LA. OIG initiated the audit in conjunction with the OIG Gulf Coast Region's audit plan

and examination of relief efforts provided by the Federal Government in the aftermath of Hurricanes Katrina

and Rita. During the audit to determine grant eligibility, OIG identified possible eligibility issues through a

review of the electronic data. To immediately address the issues, OIG developed an additional objective to

determine eligibility for those grants coded ineligible or lacking an eligibility determination.

Of 22,135 grants, the State funded 418 (2 percent) grants coded ineligible or lacking an eligibility

determination, totaling $15.8 million, because ICF did not have system controls in place to prevent these

improper disbursements. File reviews of 26 (6 percent) of the 418 grants, determined that, as of October 13,

2007, the State had misspent Federal funds for 17 ineligible and two unsupported grants. The remaining seven

grants were eligible or had input or coding errors.

OIG recommended that HUD require the State to (1) repay amounts disbursed for ineligible grants to its

Road Home program, (2) either support or repay amounts disbursed for unsupported grants, (3) review all of

the remaining 392 grants coded ineligible or lacking an eligibility determination and either support or repay

the $14.6 million disbursed for them, and (4) implement system controls to prevent future improper

disbursements. (Audit Report: 2008-AO-1002)



HUD OIG audited HUD's KDHAP and DVP administered by various public housing agencies. The

audit objective was to determine whether HUD established controls to ensure that HANO pre-Hurricane

Katrina Housing Choice Voucher program participants did not receive duplicate assistance under KDHAP

and/or DVP.

OIG determined that in most cases, HUD ensured that KDHAP/DVP participants receiving assistance

were not also receiving assistance under HANO's Housing Choice Voucher program. However, in a few

instances (4 of 51), the participants received duplicate assistance. In all four cases, this occurred because HUD

allowed Housing Choice Voucher Homeownership program (Homeownership program) participants to

execute and receive KDHAP/DVP payments on their behalf while continuing to receive mortgage payments

under the Homeownership program. HANO continued to pay participants Homeownership program

assistance payments after Hurricane Katrina to avoid placing the participants into foreclosure. Since the

Housing Choice Voucher and KDHAP/DVP program regulations prohibit families from receiving assistance

while receiving another housing subsidy or receiving assistance for more than one unit or a unit in which they

do not reside, $13,147 in Homeownership program funds was misspent. In addition, two of the four

participants also received CDBG funding totaling $161,090 to rebuild their property, and the other two

applied for assistance but had not received it as of October 2007. Finally, all four participants had also received

duplicate rental assistance funding from FEMA totaling $14,655 as of September 2006. In addition, there is

a risk that additional duplicate participants exist that were not detected by our testing methodology, as Social

Security number information in HANO's register was not always reliable.

OIG recommended that the HUD take appropriate actions to recover the ineligible funding totaling

$13,147 for four duplicate participants, prevent duplicate payments by working with the lenders to rework the

mortgages and suspending payment or seek a waiver for the duplicate payment prohibition for Homeownership
             

             

96

program participants, and work with FEMA to ensure that its assistance did not duplicate HUD's rental

assistance and recover any ineligible duplicate assistance payments, which currently total $14,655. (Audit

Report: 2008-AO-0801)



HUD OIG audited the Homeowner's Assistance Grant Program, a component of the State of Mississippi's

administration of the $5.058 billion in CDBG disaster recovery funds provided to the State in the aftermath of

Hurricane Katrina. The State allocated $3 billion to help homeowners in Southern Mississippi recover from

Hurricane Katrina. The audit objectives were to determine whether the State and/or its contractor (1) allowed

only eligible homeowners to participate in the Program and (2) implemented adequate controls to prevent the

homeowners from receiving duplication of benefits.

The State and its contractor had controls to ensure that only eligible homeowners participated in the

Program. One of the 103 applicants reviewed was not eligible for the Program because the applicant did not

meet one or more of the five eligibility requirements. The ineligible applicant received $16,871 in grant

assistance. In addition, the State and its contractor had adequate controls to prevent homeowners from

receiving duplicate benefits for the same damage. Of the 103 applicants reviewed, only one received a

duplication of benefits totaling $3,700.

OIG recommended that HUD require the Authority to repay the Program $20,571 for ineligible costs.

(Audit Report: 2008-AO-1801)



Chapter 5: Hurricane Relief Oversight
             

             

Chapter 5: Hurricane Relief Oversight 97

Investigations

During this reporting period, OIG opened 112 and closed 85 investigations in the Gulf Coast Region

disaster relief program areas. Judicial action taken on these cases included more than $1.1 million in

investigative recoveries; $11.5 million in funds put to better use; 38 indictments or informations; 31

convictions, pleas, or pretrial diversions; 13 administrative actions; and 38 arrests.

OI continues to concentrate on disaster funding fraud in the Gulf Coast region. The primary focus during

this period remains in both Mississippi and Louisiana with the homeowner grant programs and small rental

grant programs. The purpose of the Homeowner Grant Assistance program is to provide a one-time grant

payment (maximum $150,000) to eligible homeowners who had suffered flood damage to their primary

residence as of August 29, 2005, from Hurricane Katrina. The program is designed to provide compensation

to those impacted by the hurricane. The small rental grant programs provide financial assistance to small rental

property owners to return an estimated 18,000 affordable and ready to be occupied units to the rental housing

market. The primary purposes of this financing program is to enable small-scale rental properties to return to

the market while limiting the amount of debt required for the properties so that the owners will be able to

charge affordable rents. Investigations of these programs and others require continued close coordination by

the Gulf Coast Region office with SBA OIG, the Federal Bureau of Investigation (FBI), and the Department

of Homeland Security Office of Inspector General (DHS OIG).

OI continues to conduct outreach to law enforcement partners, State agencies, multifamily property

owners and managers, and HUD personnel in a continuing effort to implement antifraud measures and to

ensure that information flows to the HKFTF Command Center in Baton Rouge, LA. The main HUD

program areas are the Office of Community Planning and Development, Office of Public Housing, Office of

Multifamily Housing, and the Office of Single Family Housing.
             

             

98 Chapter 5: Hurricane Relief Oversight

OI continues to support the HKFTF and during this period has conducted analysis of more than 2,000

hotline complaints, referring more than 70 of those complaints to the regional office for further evaluation.

The Gulf Coast Region office has referred more than 50 of the HKFTF complaints to the Road Home

program for additional review, resulting in 20 criminal investigations being initiated jointly by HUD OIG and

the FBI on suspected fraud in the homeowner assistance program.

The Gulf Coast Region and HUD's Office of Public Housing have collaborated on antifraud measures in

DHAP, over which HUD assumed administrative control from FEMA in late 2007. DHAP, as a continuation

of the FEMA DVP, provides for the immediate need for housing assistance that disaster-displaced families face,

relieving FEMA of this responsibility. HUD, through an interagency agreement with FEMA, is administering

DHAP with more than $565 million in FEMA grant funds. HUD has control of DHAP for up to 18 months

of rental assistance and case management services for approximately 45,000 FEMA families, using public

housing authorities nationwide. During this period, HUD has referred more than 150 potential DHAP

criminal investigations of duplicate benefits by landlords, which are being reviewed and analyzed at the HKFTF

for FEMA fraud, HUD fraud, SBA fraud, and other potential violations.

Some of the investigations discussed in this report were conducted jointly with Federal, State, and local law

enforcement agencies, including HKFTF. Following the Attorney General's policy of "zero tolerance" in

relation to Hurricane Katrina fraud, OIG pursues all allegations of waste, fraud, and abuse in HUD's

Hurricanes Katrina, Rita, and Wilma benefit programs. The results of various significant investigations are

described below.

Homeowner Grant Fraud

 Barbara Robicheaux was sentenced in U.S. District Court, Lafayette, LA, to 5 years probation; ordered to

pay SBA $121,000, FEMA $8,211, and the U.S. Department of Agriculture (USDA) $798 in restitution;

directed to remit $294 in monthly supervision costs for 5 years; and fined $15,000 for her earlier guilty plea to

making false claims. Robicheaux applied for and received SBA, FEMA, and USDA disaster assistance and

attempted to obtain $150,000 in CDBG disaster recovery funds through the Louisiana Road Home program

for hurricane-damaged residential property, but the property damaged was not her residence during Hurricane

Rita.



Mario LeLeaux was sentenced in U.S. District Court, Gulfport, MS, to 12 months probation and ordered

to pay MDA $35,413, FEMA $16,712, and USDA $792 in restitution for his earlier guilty plea to making

false claims, theft of government funds, and food stamp fraud. LeLeaux applied for and received FEMA and

USDA disaster assistance and CDBG disaster recovery funds through MDA for hurricane-damaged residential

property, but the property damaged was not his primary residence.



Debra Savage was sentenced in U.S. District Court, Gulfport, MS, to 6 months home confinement with

electronic monitoring and 60 months supervised release and ordered to perform 60 hours of community

service and pay the Mississippi Development Authority (MDA) $39,616 and FEMA $17,182 in restitution for

her earlier guilty plea to making false statements and filing false claims. Savage applied for and received FEMA
             

             

Chapter 5: Hurricane Relief Oversight 99

and CDBG disaster recovery funds through MDA for hurricane-damaged residential

property, but the property damaged was not her primary residence.



Pamelia Conroy was sentenced in U.S. District Court, Gulfport, MS, to 21months

confinement and 36 months supervised probation and ordered to perform 70 hours of

community service and pay FEMA $22,815 in restitution for her earlier guilty plea to

making false statements, filing false claims, and theft of government funds. Conroy

applied for and received FEMA disaster assistance and attempted to obtain USDA, SBA,

and $100,000 in CDBG disaster recovery funds through MDA for hurricane-damaged

residential property, but the property damaged was not her primary residence.



Vincent Pempeit was sentenced in U.S. District Court, Gulfport, MS, to 3 years

probation and 6 months home confinement with electronic monitoring and ordered to

pay FEMA $9,558 in restitution for his earlier guilty plea to making false

statements and filing false claims. Pempeit applied for and received FEMA disaster

assistance and attempted to obtain $150,000 in CDBG disaster recovery funds through

MDA for hurricane-damaged residential property, but the property damaged was not his

primary residence.



Copyright, 2007. The

Sun Herald - Biloxi,

MS. Reprinted with

permission.

William and Deane Palmer were each sentenced in U.S. District Court, Gulfport,

MS, for their earlier guilty pleas to making false statements and filing false claims.

William Palmer was sentenced to 18 months incarceration and 3 years supervised

release, ordered to pay FEMA $6,706 and SBA $47,078 in restitution, and fined $4,000.

Deane Palmer was sentenced to 36 months probation, ordered to pay the above

restitution jointly and severally with her husband, and fined $600. William and Deane

Palmer applied for and received $56,706 in FEMA and SBA disaster assistance and

attempted to obtain $68,780 in CDBG disaster recovery funds through MDA for

hurricane-damaged residential property, but the property damaged was not their

primary residence.



Christina Moses was sentenced in U.S. District Court, Gulfport, MS, to 6 months home confinement and

5 years probation and ordered to perform 70 hours of community service and pay FEMA $24,337 in

restitution for her earlier guilty plea to making false statements and filing false claims. Moses applied for and

received FEMA disaster assistance and attempted to obtain $150,000 in CDBG disaster recovery funds through

MDA for hurricane-damaged residential property, but the property damaged was not her primary residence.


             

             

100

Joseph Pugh was sentenced in U.S. District Court, Gulfport, MS, to 12 months and 1 day incarceration

and 36 months supervised release, ordered to perform 50 hours of community service and pay FEMA $8,000

and SBA $10,156 in restitution, and fined $3,000 for his earlier guilty plea to making false statements and

theft of government funds. Pugh applied for and received FEMA and SBA disaster assistance and attempted to

obtain $150,000 in CDBG disaster recovery funds through MDA for hurricane-damaged residential property,

but the property damaged was not his primary residence.



Dominic Leperi, Jr., was sentenced in U.S. District Court, Gulfport, MS, to 5 months incarceration, 5

months home confinement, and 24 months supervised release and ordered to perform 100 hours of

community service and pay FEMA $24,634 in restitution for his earlier guilty plea to making false statements

and filing false claims. Leperi applied for and received FEMA disaster assistance and attempted to obtain

$64,503 in CDBG disaster recovery funds through MDA for hurricane-damaged residential property, but the

property damaged was not his primary residence.



Catherine Pruitt pled guilty in U.S. District Court, Gulfport, MS, to making false statements and mail

fraud. Pruitt applied for and received $4,358 in FEMA disaster assistance and attempted to obtain $100,000

in CDBG disaster recovery funds through MDA for hurricane-damaged residential property, but the property

damaged was not her primary residence.



Doris Wilkerson was indicted in U.S. District Court, Jackson, MS, for making false statements, filing false

claims, theft of government funds, and wire fraud. Wilkerson allegedly applied for and attempted to obtain

$150,000 in CDBG disaster recovery funds through MDA for hurricane-damaged residential property, but

the property damaged was not her primary residence.



Copyright, 2007. The Sun Herald - Biloxi, MS. Reprinted with permission.

Chapter 5: Hurricane Relief Oversight
             

             

101

Lee Taylor was convicted in U.S. District

Court, Gulfport, MS, of making false statements,

theft of government funds, and wire fraud.

Taylor applied for and received $25,841 in

FEMA disaster assistance and attempted to

obtain $150,000 in CDBG disaster recovery

funds through MDA for hurricane-damaged

residential property, but Taylor did not own or

 occupy the property during Hurricane Katrina.



Annette and Roger Williams were each indicted in U.S.

District Court, Gulfport, MS, for making false statements, filing

false claims, theft of government funds, committing fraud in

connection with a government loan, and civil forfeiture. Annette

and Roger Williams allegedly applied for and received $17,814 in

FEMA, $80,600 in SBA, and $13,667 in USDA disaster assistance

and attempted to obtain $4,219 in CDBG disaster recovery funds

through MDA for hurricane-damaged residential property, but the

property damaged was not their residence during the storm.

Copyright, 2008. The Sun Herald -

Biloxi, MS. Reprinted with

permission.

FEMA and Other Fraud by HUD Tenants

Erica Prince, a Houston Housing Authority (HHA) Section 8 tenant, and Linda

Prince, Carroll Ashton, Tawana Chevis, Roland Dixon, and Tarrance Manning each pled

guilty in U.S. District Court, Houston, TX, to conspiracy to file false claims. Erica

Prince and the above conspirators and others filed 77 fraudulent FEMA disaster

assistance applications and received $92,958 in FEMA assistance they were not entitled

to receive.



Sixteen defendants were indicted or charged in U.S. District Court,Tucson, AZ, or

Maricopa County Superior Court, Phoenix, AZ, for making false statements, theft of

government funds, or committing forgery. The above defendants allegedly applied for

and collectively received $67,000 in HUD-funded housing assistance and FEMA or

American Red Cross disaster assistance after they claimed to be displaced victims of

Hurricane Katrina, but each defendant resided in Arizona during the storm.



Copyright, 2007. The Arizona

Republic -Phoenix, AZ.

Reprinted with permission.

Chapter 5: Hurricane Relief Oversight
             

             

102

Willie Blackmon, Jr., a former unauthorized Mississippi Regional Housing Authority Section 8 tenant,

was sentenced in U.S. District Court, Jackson, MS, to 12 months incarceration and 36 months supervised

release and ordered to pay FEMA $14,750 in restitution for his earlier guilty plea to making false statements,

theft of government funds, aiding and abetting, and mail fraud. Blackmon applied for and received $14,750

in FEMA disaster assistance after he claimed residency in a Biloxi Housing Authority (BHA) subsidized unit

during Hurricane Katrina, but Blackmon was not an authorized BHA tenant before the storm.



Linda Southall and Pamela Courtney, Thibodaux Housing Authority (THA) public housing tenants,

each pled guilty or were sentenced in U.S. District Court, New Orleans, LA. Southall pled guilty to theft of

government funds, and Courtney was sentenced to 3 years supervise probation and ordered to pay FEMA

$500 in restitution for her earlier guilty plea to making false statements and claims. Southall and Courtney

each applied for and received FEMA disaster assistance after they claimed personal property damage from

Hurricane Katrina, but THA suffered no stormdamage, nor were tenants evacuated.



Michelle Chapman, Chemeca Gant, Janale King, and Aaron Jones, authorized or unauthorized San

Francisco Housing Authority (SFHA) Section 8 or public housing tenants, were each charged in U.S. District

Court, San Francisco, CA, with theft of government funds. In addition, Antoinette Perea, a SFHA Section 8

tenant, was sentenced to 12 months probation and ordered to pay FEMA $2,000 in restitution for her earlier

guilty plea to theft of government funds. Chapman, Gant, King, and Jones allegedly and Perea admittedly

applied for and received FEMA disaster assistance after they claimed to be displaced victims of Hurricane

Katrina, but the above defendants resided in SFHA subsidized housing units during the storm.



Renada Thornton, a Slidell Housing Authority

Section 8 tenant and former DVP participant at both the

Omaha Housing Authority and the Fulton County

Housing Authority, pled guilty in U.S. District Court,

New Orleans, LA, to wire and mail fraud. Thornton

claimed hurricane evacuee status on 14 separate occasions

at the American Red Cross Disaster Assistance Centers in

Louisiana and Georgia and fraudulently obtained $18,580

in disaster assistance she was not entitled to receive.



Shantelle Griffin, a Section 8 tenant at Himbola

Manor Apartments (Himbola), a HUD-funded

multifamily housing development, was sentenced in

U.S. District Court, Lafayette, LA, to 36 months

probation and ordered to pay FEMA $2,000 in

Copyright, 2008. The Times-Picayune -

New Orleans, LA. Reprinted with permission.

Chapter 5: Hurricane Relief Oversight
             

             

103

restitution for her earlier guilty plea to making a false claim. Griffin applied for and received FEMA disaster

assistance after she claimed personal property damage from Hurricane Rita, but Himbola suffered no

storm damage, nor were tenants evacuated.



Lawanda Clark, a Section 8 tenant at Scotland Square Apartments (Scotland), a HUD-funded multifamily

housing development, pled guilty in U.S. District Court, Baton Rouge, LA, to mail fraud. In addition, former

Scotland Section 8 tenants Stephanie Jackson, Bridgette Toney, and Aretha Morris were each sentenced for

their earlier guilty pleas to theft of government funds or filing false claims. Jackson and Toney were each

sentenced to 2 years probation; Morris was sentenced to 3 years probation; and Jackson, Toney, and Morris

were ordered to collectively pay FEMA $4,517 in restitution. The above defendants applied for and received

FEMA disaster assistance after they claimed property damage or hurricane Katrina evacuee status, but Scotland

suffered no storm damage, nor were tenants evacuated.



Loretta Russell, a former Baton Rouge Housing Authority (BRHA) Section 8 tenant, was sentenced in

U.S. District Court, Baton Rouge, LA, to 2 years probation and ordered to pay FEMA $2,000 in restitution

for her earlier guilty plea to making false claims. Russell applied for and received FEMA disaster assistance after

she claimed Hurricane Katrina evacuee status, but BRHA suffered no storm damage, nor were tenants

evacuated.



Patricia Franklin, a former Oakland Housing Authority (OHA) Section 8 tenant, was sentenced in U.S.

District Court, Oakland, CA, to 2 years probation, ordered to pay FEMA $4,110 in restitution, and fined

$1,000 for her earlier guilty plea to theft of government funds. Franklin applied for and received FEMA

disaster assistance after she claimed to be a displaced victim of Hurricane Katrina, but Franklin resided in OHA

subsidized housing during the storm.



Penny Joseph, a former Indianapolis Housing Authority (IHA) Section 8 tenant, was convicted in Marion

County Superior Court, Indianapolis, IN, of welfare fraud. Joseph applied for and received $2,600 in IHA

housing assistance after she claimed to be a displaced victim of Hurricane Katrina, but Joseph resided in

Indianapolis during the storm.



Pamela Burdine, a Mississippi Regional Housing Authority VIII (MRHA) Section 8 tenant, was indicted

in U.S. District Court, Gulfport, MS, for theft of government funds and mail fraud. Burdine allegedly

obtained a DHAP voucher after Hurricane Katrina but failed to reside in the MRHA unit and subleased the

unit to others. HUD's loss is estimated at $4,838.



Chapter 5: Hurricane Relief Oversight
             

             

104

Shaunena Staple, a former Mississippi Regional Housing Authority VIII (MRHA) Section 8 tenant, was

arrested after her indictment in U.S. District Court, Minneapolis, MN, for making false claims. Staple

allegedly applied for and received $5,688 in MRHA housing assistance and $2,537 in FEMA disaster

assistance after she claimed personal property damage and Hurricane Katrina evacuee status, but Staple resided

in Minnesota during the storm.

Other Fraud

Travis Frank and Regina Dewey were each sentenced in U.S. District Court, Houston, TX, for their earlier

guilty pleas to conspiracy. Frank was sentenced to 8 months incarceration and 3 years supervised release,

Dewey was sentenced to time served (approximately 2 months) and 3 years supervised release, and Frank and

Dewey were ordered to pay FEMA $12,112 in restitution, severally and individually. Frank applied for and

received FEMA disaster assistance after he claimed residency in a Housing Authority of New Orleans (HANO)

subsidized unit during Hurricane Katrina, but Frank never resided in HANO subsidized housing. Dewey

provided fraudulent documents and falsified Frank's residency in a HANO subsidized unit.



Latasha Maloid was sentenced in U.S. District Court, Baton Rouge, LA, to 3 years probation and ordered

to pay FEMA $2,000 in restitution for her earlier guilty plea to submitting a false claim. Maloid applied for

and received FEMA disaster assistance after she claimed to be a HANO evacuee, but Maloid resided in Baton

Rouge, LA, during Hurricane Katrina.



Stanley Burrell was indicted in U.S. District Court, Beaumont, TX, for making false claims and mail

fraud. Burrell allegedly applied for and received $12,750 in FEMA disaster assistance after he claimed

residency in a HANO subsidized unit during Hurricane Katrina, but Burrell never resided in HANO assisted

housing.



Joy Carter pled guilty in U.S. District Court, Jackson, MS, to embezzling Federal funds and was sentenced

to 1 year probation and ordered to perform 40 hours of community service and pay FEMA $893 in restitution.

Carter applied for and obtained $2,000 in FEMA disaster assistance after she fraudulently claimed property

damage from Hurricane Katrina.

Hurricane-Related Outreach

Louisiana Outreach

Assistant Special Agent in Charge (ASAC) Fernando Ramos and Senior Forensic Auditor (SFA) Windell

Durant presented fraud awareness briefings in Baton Rouge, LA, to Louisiana Road Home program

contractor ICF International staff members involved in the Small Landlord Rental and Road Home

Recoupment programs. ASAC Ramos and SFA Durant provided an overview of HUD OIG's responsibilities

when conducting audits and investigations, discussed systemic problems previously identified and methods of

Chapter 5: Hurricane Relief Oversight
             

             

105

reporting suspected fraud and suspicious activity, and described specific tenant and rental rate issues involving

the programs identified above. Approximately 12 ICF International staff members attended the briefings.

Mississippi Outreach

Special Agent in Charge (SAC) Thomas Luke and SFA Windell Durant provided an overview of HUD

OIG's mission and authority, described fraud detection and enforcement methods used to successfully

prosecute Federal Housing Administration-insured and subsidized multifamily fraud, and discussed HUD's

role in the FEMA DHAP or DVP at a Southeastern Affordable Housing Management Association meeting

held in Biloxi, MS. Approximately 100 Mississippi multifamily development owners, agents, and employees

attended.

Hurricane-Related Federal Sentencing Guidelines

Pursuant to Section 5 of Pub. Law 100-179 (Jan. 7, 2008), the Department of Justice (DOJ) proposed

amendments to Section 2B1.1 of the Federal Sentencing Guidelines, including enhancing the offense level for

disaster fraud. By letter to the U.S. Sentencing Commission, OIG expressed its support for DOJ’s proposal.

Additionally, Deputy Assistant Inspector General Ruth A. Ritzema testified before the U.S. Sentencing

Commission, during a hearing concerning DOJ’s proposal. As a consequence of HUD’s efforts to respond the

September 11, 2001 terrorist attack in New York City, the devastation of the Gulf Coast by Hurricanes Katrina,

Rita and Wilma, and other natural disasters, OIG is acutely aware of the vulnerability of Federal disaster

assistance to fraud. OIG strongly believes that this vulnerability derives largely from the laudable motivation

to quickly provide assistance to those in need during their time of need, not months later; and the unfortunate

realities that the volume of assistance payments complicates detection, and that the relatively small dollar

amount of the majority of such payments tends to reduce the likelihood of prosecution. The U.S. Sentencing

Commission concurred with these beliefs, and—effective November 1, 2008—amended Section 2B1.1 to

enhance the offense for level disaster fraud by 2 with a floor of 12. See 73 Fed. Reg. 26923, 26933 (May 9,

2008). OIG is convinced that this enhancement of the offense level for disaster fraud will improve the

likelihood of prosecution of disaster fraud cases and increase deterrence, and, thus, will reduce the vulnerability

of disaster assistance to fraud.

Hurricane-Related OIG Hotline

During this reporting period, the Hotline received and processed 77 complaints related to Hurricanes

Katrina, Rita, and Wilma.



Chapter 5: Hurricane Relief Oversight
             

             

106

Inspections and Evaluations

Biloxi Housing Authority Risk Assessment: An Evaluation of HUD

Community Development Block Grant and Office of Public and Indian

Housing Funds Disbursed for Hurricane Katrina Reconstruction

The Biloxi Housing Authority provided housing for 455 families at six developments when Hurricane

Katrina destroyed 172 units and seriously damaged more than 300 more on August 29, 2005. Since August

2005, the Biloxi Housing Authority has managed both the source and use of more than $22 million in disaster

recovery funds to rebuild its damaged sites.

HUD OIG completed a risk assessment of the HUD funding associated with the Biloxi Housing

Authority reconstruction efforts. The reconstruction funding derived from the Office of Public and Indian

Housing, CDBG through MDA, the State agency responsible for administering and monitoring Katrina

recovery efforts, and other HUD sources. The evaluation found that the Biloxi Housing Authority

demonstrated sufficient accounting and management control over these resources to minimize the risk of

funding overlaps. However, since the State of Mississippi allocated an additional $41 million in CDBG funds

to support its continued recovery, HUD and MDA need to scrutinize each grant application and the sites

selected for redevelopment and carefully monitor future construction and related expenditures of taxpayer

funds. HUD OIG provided HUD with this report as a management advisory without formal

recommendations. (I&E Report: IED 08 001)

The Biloxi Housing Authority used disaster recovery funds to rebuild its HOPE VI developmentto architecturally

complement the historical character of Mississippi coastal homes.



Chapter 5: Hurricane Relief Oversight
               

               

Chapter 6

Other Significant

Audits and Investigations/

OIG Hotline
             

             

108

In addition to the audits and investigations described in this chapter, the U.S. Department of Housing and

Urban Development Office of Inspector General (HUD OIG), has conducted numerous outreach efforts (see

chapter 7, pages 122 and 125).

Audits

Strategic Initiative 4: Contribute to improving HUD’s execution and

accountability of fiscal responsibilities as a relevant and problem

solving advisor to the Department

Chapter 6: Other Significant Audits and Investigations/OIG Hotline

Key program results Questioned costs Funds put to better use

Audit 6 audits --- $922 million

Our

focus

Page 108

Page 108

 Page 109

Page 109

Page 109

Page 113

- Audit of HUD's financial statements

- FHA financial statements

- Audit of the Government National Mortgage Association's (Ginnie Mae)

 financial statements

- Review of FHA controls over its IT resources

- Review of Unisys performance and security controls

- Fiscal year 2007 review of information systems controls in support of

 the financial statement audit

Audit of HUD's Financial Statements

HUD OIG, Washington, DC, audited HUD's fiscal years 2007 and 2006 financial statements. The

financial statements were presented fairly, in all material respects, in conformity with accounting principles

generally accepted in the United States of America. OIG identified (a) two material weaknesses, (b) eight

significant weaknesses, and (c) one instance of noncompliance with applicable laws and regulations; assessed

actions taken by HUD to mitigate the deficiencies noted; and made recommendations for corrective actions.

(Audit Report: 2008-FO-0003)

FHA Financial Statements

Urbach Kahn and Werlin LLP, Washington, DC, audited the Federal Housing Administration's (FHA)

financial statement for the years ending September 30, 2007 and 2006.

FHA's principal financial statements were presented fairly, in all material respects, in conformity with

accounting principles generally accepted in the United States of America. Three significant deficiencies were

identified, two of which, relating to FHA's home equity conversion mortgage system and subsidy cash flow

model, were considered to be material weaknesses. The audit did not identify any instances of noncompliance

with laws and regulations. (Audit Report: 2008-FO-0002)
             

             

Chapter 6: Other Significant Audits and Investigations/OIG Hotline 109

Audit of the Government National Mortgage Association's

Financial Statements

Carmichael, Brasher, Tuvell and Company, Washington, DC, audited the Government National Mortgage

Association's (Ginnie Mae) financial statements for the years ending September 30, 2007 and 2006.

The financial statements presented fairly, in all material respects, the financial position of Ginnie Mae as of

September 30, 2007, and September 30, 2006, and the results of its operations and its cash flows for the years

then ended in conformity with accounting principles generally accepted in the United States of America. The

audit identified one significant deficiency in Ginnie Mae's internal controls and no material weaknesses or

reportable instances of noncompliance with laws, regulations, and provisions of contracts. (Audit Report:

2008-FO-0001)

Review of FHA Controls Over its Information Technology

Resources

HUD OIG, Washington, DC, audited the Federal Housing Administration's (FHA) management of its

information technology resources and compliance with HUD and other Federal information security

requirements. Additionally, OIG assessed FHA efforts to comply with HUD policy to close out all

information security vulnerabilities by November 2007.

FHA had made progress in meeting the November deadline to close out known information technology

security vulnerabilities and update required security documents. However, FHA had not implemented the

Federal information security risk management framework and did not comply with laws, directives, executive

orders, policies, standards, or regulations. In addition, HUD had not fully implemented an information

security program to provide a full range of role-based training needed by FHA application system owners to

assume the system owner responsibilities stated in HUD's policy.

OIG recommended that HUD (1) align FHA's information security line of delegation and accurately

define roles to ensure that security controls are effectively implemented, (2) address and eliminate known

security vulnerabilities, (3) identify the resources needed to provide the necessary security for its applications

and ensure that staff with significant information security responsibilities obtain necessary training to assume

assigned information security roles and responsibilities, and (4) complete the implementation of its security

program for staff with specific security responsibilities and implement additional tools and forums to provide

system owners the access needed to ensure that their data and systems are protected. (Audit Report:

2008-DP-0002)

Review of Unisys Performance and Security Controls

HUD OIG, Washington, DC, audited HUD's security and performance controls over the Unisys 2200

operating system, on which financial systems reside, to determine whether operational, technical, and

management controls were in place and adequately protected HUD's data and resources.

HUD was not in full compliance with applicable Federal laws and guidelines; and operational, technical,

and management deficiencies existed in implementing effective security and performance controls over the

Unisys 2200 operating system.
             

             

110

OIG determined that the contents of this report would not be appropriate for public disclosure; therefore,

OIG has limited its distribution to selected HUD officials. (Audit Report: 2008-DP-0001)

Fiscal Year 2007 Review of Information Systems Controls in

Support of the Financial Statement Audit

HUD OIG reviewed general and application controls for selected information systems to assess

management controls over HUD's computing environments as part of OIG's audit of HUD's financial

statements for fiscal year 2007 under the Chief Financial Officer's Act of 1990.

There were weaknesses and deficiencies in controls that stemmed from HUD's noncompliance with (1)

requirements for internal controls established by the Office of Management and Budget (OMB), (2) guidance

issued by the National Institute of Standards and Technology (NIST) for securing information systems, and

(3) HUD's own policies and procedures.

OIG recommended that HUD take steps to ensure compliance with OMB requirements, NIST

guidelines, and HUD's own internal policies and procedures. (Audit Report: 2008-DP-0003)



Chapter 6: Other Significant Audits and Investigations/OIG Hotline
             

             

Chapter 6: Other Significant Audits and Investigations/OIG Hotline 111

Investigations

Strategic Initiative 4: Contribute to improving HUD’s execution and

accountability of fiscal responsibilities as a relevant and problem

solving advisor to the Department

$

recovered

Admin/civil

actions

Investigations 29 $168,000 0

Convictions/pleas/

pretrials

Cases

closed

Key program

results

5

The investigation discussed below was generated from leads provided by HUD program staff and

conducted jointly with Federal, State, or local law enforcement agencies.

Michelle Meek, a HUD employee and the former treasurer for the American Federation of Government

Employees (AFGE) Local Union 3435, was indicted in U.S. District Court, Columbus, OH, for making false

statements and theft. Meek allegedly provided false accounting statements and embezzled about $9,000 in

AFGE Local Union 3435 funds.


             

             

112 Chapter 6: Other Significant Audits and Investigations/OIG Hotline

OIG Hotline

The HUD OIG Hotline is operational 5 days a week, Monday through Friday, from 10:00 a.m. to 4:30

p.m. The Hotline is staffed by 10 full-time OIG employees who take allegations of waste, fraud, abuse, or

serious mismanagement in HUD or HUD-funded programs from HUD employees, contractors, and the

public. The Hotline also coordinates reviews with internal audit and investigative units or with HUD program

offices.

During this reporting period, the Hotline received and processed 10,114 complaints – 78 percent received

by telephone, 15 percent by mail, and 7 percent by e-mail. Every allegation received by the Hotline is logged

into a database and tracked.

Of the complaints received, 874 were related to the mission of OIG and were addressed as Hotline cases.

Hotline cases are referred to OIG's Offices of Audit and Investigation or to HUD program offices for action

and response. The following illustration shows the distribution of Hotline case referrals by percentage.

Chart 6.1: Hotline cases opened by program area

Public and Indian

Housing

64%

Multifamily

Housing

15%

Community

Planning and

Development

4%

OIG Audit and

Investigation

12%

Other HUD

offices

1% Single-Family

Housing

4%

The Hotline closed 1,765 cases this reporting period. The closed Hotline cases included 138 substantiated

allegations. The substantiated allegations resulted in eight administrative sanctions including actions taken

against HUD employees for misusing their e-mail accounts and HUD contractors for contracting

improprieties. The Department also took 130 corrective actions that resulted in $131,080 in recoveries of

losses and more than $2.3 million in HUD funding that could be put to better use. The recoveries included

repayments of overpaid rental subsidies. Some of the funds that could be put to better use were the result of

cases in which tenants were terminated from public housing or multifamily housing programs for improperly

reporting their incomes or family composition to qualify for rental assistance.
             

             

Chapter 6: Other Significant Audits and Investigations/OIG Hotline 113

Chart 6.2: Hotline dollar impact from program offices

$2,500,000

$2,000,000

$1,500,000

$1,000,000

$500,000

$0

Public and Indian

Housing

Multifamily

Housing

Recoveries Funds put to better use

Rental fraud and

improprieties

93%

Mismanagement

4%

Owner/occupant

violations

1% Other

2%

Chart 6.3: Substantiated cases by type of complaint received by Hotline


               

               

Chapter 7

Outreach

Efforts
             

             

116

To foster cooperative, informative, and mutually beneficial relationships with agencies and organizations

assisting the U.S. Department of Housing and Urban Development (HUD) in accomplishing its mission, the

Office of Inspector General (OIG) participates in special outreach efforts. The outreach efforts described

below complement routine coordination with Federal, State, and local law enforcement agencies, various

congressional committees or subcommittees, and other OIGs. During outreach efforts, OIG personnel present

information about HUD OIG's role and function, provide audit and investigative results, and discuss desired

goals and objectives.

Single-Family Housing Programs

Special Agent in Charge (SAC) Barry McLaughlin and Regional Inspector General for Audit (RIGA)

Heath Wolfe provided an overview of single-family programs, the Program Fraud Civil Remedies Act, and

common Federal Housing Administration (FHA) mortgagee audit findings at an Illinois Mortgage Bankers

Association (MBA) conference held in Springfield, IL. More than 20 members attended.



SAC Rene Febles and Special Agent (SA) Michael Carlucci described mortgage fraud "red flag" indicators

to New York City and Long Island Credit Union Real Estate Network members meeting in Brookhaven, NY.

Approximately 20 members attended.



SAC Barry McLaughlin provided a presentation, entitled "Staying Ahead of Mortgage Fraud - Solutions,

Tools, and Strategies for the Mortgage Industry," for more than 80 Illinois MBA members meeting in Naperville,

IL. Special Assistant U.S. Attorney Patrick Layng and Federal Bureau of Investigation (FBI) Supervisory

Special Agent Anthony D'Angelo also addressed the members.



SAC Barry McLaughlin, Federal National Mortgage Association senior industry relations manager Amy

Heinz, and Freddie Mac lead investigator Robb Hagberg described mortgage fraud schemes, trends, and

consequences for the secondary mortgage market at an MBA National Fraud Conference held in Chicago, IL.

More than 125 members attended.



SAC Barry McLaughlin provided an overview of HUD OIG, mortgage fraud, predatory lending, and

common fraud schemes and trends at a Milwaukee Chapter of the League of Woman Voters meeting held in

Milwaukee, WI. More than 30 members attended.



Assistant Special Agent in Charge (ASAC) Brad Geary provided a presentation, entitled "An Informed

Discussion of Nontraditional Mortgage Products and Escalating Foreclosures," and described the role of HUD

OIG in both FHA and Section 8 landlord rescue fraud investigations at a Federal Reserve Bank meeting held

in Waukesha, WI. In addition, ASACs Brad Geary and Ray Espinosa provided two training sessions, entitled

Chapter 7: Outreach Efforts
             

             

Chapter 7: Outreach Efforts 117

"Current Trends in Mortgage and Real Estate Fraud," described mortgage fraud schemes and "red flag"

indicators, and hosted a question and answer forum at a Federal Reserve Bank meeting in Milwaukee, WI.

More than 160 financial, legal, mortgage institution, nonprofit, and local governmental representatives

attended.



ASACs Ray Espinosa and Brad Geary provided an overview of real estate and mortgage fraud schemes at a

National Association of Realtors meeting held in Chicago, IL. ASACs Espinosa and Geary described inflated

appraisals, property flipping, equity skimming, and rescue fraud for more than 80 attorneys in attendance.



ASAC Suzanne Steigerwald provided an overview of HUD OIG's mission and authority and described

fraud detection and enforcement methods used to successfully prosecute investigations at a real estate fraud

conference hosted by the HUD Homeownership Center in Denver, CO. More than 100 real estate

professionals attended.



ASAC Brad Geary provided a presentation, entitled "Mortgage Fraud: Destruction of Neighborhoods,"

and explained the impact of bankruptcy and mortgage fraud on communities at a U.S. Trustee meeting held in

Detroit, MI. In addition, SA Jim Waldron provided an overview of bankruptcy issues that affect single-family

and public housing programs. Approximately 75 U.S. Trustees, Assistant U.S. Attorneys, and others attended.



ASAC Brad Geary provided a presentation, entitled "The Latest Trends in Mortgage and Real Estate Fraud,"

and described property flipping, rescue fraud, and FHA vulnerabilities at the Illinois Association of Mortgage

Professionals Midwest Lending conference held in Lombard, IL. Approximately 50 association members

attended.



ASAC Herschell Harvell discussed mortgage fraud trends and patterns at an annual Fraud and Risk

Conference sponsored by SourceMedia in Las Vegas, NV. Approximately 110 mortgage industry

representatives attended.



ASAC Brad Geary provided a presentation, entitled "Real Estate Fraud and Bankruptcy Prosecutions," and

discussed foreclosure and rescue fraud trends and investigations at a U.S. Trustees meeting held at the

Department of Justice National Advocacy Center in Columbia, SC. More than 50 trial attorneys attended.


             

             

118

ASAC Brad Geary provided an overview of HUD OIG bankruptcy investigations and real estate schemes

within the FHA and Section 8 programs to more than 25 bankruptcy trustees meeting in Madison, WI, and

more than 80 bankruptcy trustees and attorneys meeting in Chicago, IL.



Special Agent (SA) Kedric McKnight provided an overview of FHA mortgage fraud and current trends

involving FHA loan fraud schemes at a North Texas Housing Coalition conference held in Irving, TX.

Approximately 550 individuals representing the mortgage and real estate industries attended.



SA Heather Yannello and Auditor Patrick Anthony provided a presentation, entitled "Flip or Fraud, Know

your Limits," at the Buffalo/Niagara Board of Realtors Association's annual conference held in Buffalo, NY.

SA Yannello and Auditor Anthony described illegal property flipping and other real estate fraud schemes for

more than 100 real estate agents in attendance. In addition, SAC Febles discussed HUD fraud and responded

to questions from association members.



SA Murray Stravers provided an overview of HUD OIG, FHA and conventional loans, and general

mortgage fraud schemes at an Association of Certified Fraud Examiners conference sponsored by Freddie Mac

in Las Vegas, NV. In addition, SA Stravers described fraud indicators, applicable Federal criminal and civil

statutes, administrative remedies, fraud prevention measures, tips on packaging mortgage fraud referrals,

investigative procedures and interviewing techniques, and the importance of mortgage fraud task forces. More

than 110 individuals including Assistant U.S. Attorneys; financial and real estate professionals; and Federal,

State, and local government officials and law enforcement personnel attended.



SA Michael Wagenhauser and FBI SA Todd Urheim provided an overview of HUD OIG and mortgage

fraud schemes at a Richmond Association of Realtors meeting in Richmond, VA. SAs Wagenhauser and

Urheim described document and appraisal fraud, property flipping, equity skimming, bankruptcy fraud, Real

Estate Settlement Procedures Act violations, and identity theft for approximately 35 association members.



SA Kedric McKnight was the keynote speaker at a U.S. Office of Thrift Supervision seminar held in Irving,

TX. SA McKnight presented common mortgage fraud schemes, described HUD OIG's role in loan

origination fraud investigations, and hosted a question and answer forum following his presentation.

Approximately 50 individuals representing various lending institutions, real estate firms, and nonprofit

corporations attended.



Forensic Auditor James Hoogoian provided an overview of HUD OIG and appraisal fraud relating to

FHA-insured mortgages at an Appraisal Fraud Prevention Seminar sponsored by HUD and the Appraisal

Institute in Santa Ana, CA. More than 80 licensed appraisers attended.

Chapter 7: Outreach Efforts
             

             

Chapter 7: Outreach Efforts 119

Public Housing and Rental Assistance Programs

SAC Rene Febles described housing fraud and prevention techniques at a National Association of Housing

and Redevelopment Officials (NAHRO) conference held in Galloway Township, NJ. More than 40 housing

authority representatives attended.



ASAC Michael Wixted and Assistant Regional Inspector General for Audit (ARIGA) Michael Motulski

described housing program fraud and detection methods at a Connecticut NAHRO conference in Meriden,

CT. Following their presentation, ASAC Wixted and ARIGA Motulski hosted a question and answer forum

for approximately 40 NAHRO members in attendance.



SAs Melissa McFadden and Amy Durso provided an overview of HUD OIG's mission and authority and

described fraud detection and enforcement methods used to successfully prosecute investigations at a NAHRO

conference held in Omaha, NE. Approximately 30 NAHRO members attended.



SA Murray Stravers and ARIGA Helen Sparks provided an overview of HUD OIG and described public

and Indian housing internal fraud schemes at a NAHRO conference held in Las Vegas, NV. The presentation

included case studies, fraud indicators, applicable Federal statutes, administrative remedies, and general fraud

prevention measures. More than 30 NAHRO members attended.



SAC Rene Febles and SA Michael Carlucci provided a presentation describing public corruption and

Section 8 fraud at an Association of Long Island Housing Authorities meeting in Brookhaven, NY.

Approximately 20 representatives from various Suffolk County housing authorities attended.



SAC Barry McLaughlin and HUD public and Indian housing staff members Debra Kravik and Linda

Woolever provided an overview of the HUD Enterprise Income Verification system, common tenant fraud

schemes, and housing management responsibilities at a Minnesota Multifamily Association meeting held in

Brooklyn Center, MN. Approximately 80 association members attended.



SAC Rene Febles, RIGA Edgar Moore, and ARIGA John Harrison provided an overview of HUD OIG's

mission and authority and described both the investigative and audit processes at a HUD-sponsored training

session held in New York City, NY. Approximately 50 public and Indian housing executive directors and

HUD public and Indian housing personnel from both HUD headquarters and the New York City field office

attended.


             

             

120

ASAC Tony Meeks and SAs Charles Grace and Kimberly Studerus provided a presentation, entitled

"Preventing and Identifying Section 8 Fraud," at a housing authority colloquium held at the Bremerton

Government Center in Bremerton, WA. ASAC Meeks and SAs Grace and Studerus described HUD OIG

initiatives relating to rental assistance programs; fraud indicators; criminal and civil statutes; administrative

remedies; general fraud prevention measures; and investigations involving sex offenders, unreported income,

and unauthorized tenants. Approximately 40 Bremerton, Longview, Tacoma, and Kitsap County Housing

Authority representatives attended.



ASAC Kathleen Hatcher provided an overview of HUD OIG's mission, priorities, and public and assisted

housing programs and participated as a panelist for a training session, entitled "Identifying and Preventing

Fraud in Housing Programs," at an annual Quadel Consulting Corporation (QCC) National Housing Choice

Voucher conference held in Washington, DC. QCC provides direct management, training, and consulting

services for the affordable housing industry. At the conclusion of the training session, ASAC Hatcher and

others hosted a question and answer forum for approximately 200 housing representatives in attendance.



Senior Special Agent (SSA) Daniel Ellis provided an overview of HUD OIG's mission and initiatives and

discussed fraud identification and prevention at an annual Lancaster Housing Development Corporation

(Lancaster HDC) conference held in Mountville, PA. Lancaster HDC owns and operates 36 HUD-funded

multifamily housing developments in or around the Pennsylvania counties of Berks, Chester, Dauphin, Lancaster,

Lebanon, and York. Approximately 30 Lancaster HDC managers attended.



SA Michael Wagenhauser provided an overview of HUD OIG and presented a public housing and Section

8 fraud training session at the United Council on Welfare Fraud training conference held in Virginia Beach,

VA. SA Wagenhauser described rental assistance fraud and successful prosecutions for approximately 100

members in attendance.



SA Mack Walker described public housing and Section 8 fraud schemes, portability issues, financial

recoveries, and prosecution guidelines to Central and Southern Illinois Housing Authority Association

members meeting in Galesburg, IL. Approximately 25 housing authority representatives attended.



SA Brian Rymill provided an overview of HUD OIG and described housing assistance fraud for housing

managers from Landura Management Associates, a management agent for HUD-funded multifamily housing

developments in Winston-Salem, NC. SA Rymill also described successful tenant fraud investigations and

discussed methods to identify and report fraud for criminal, civil, or administrative actions. Approximately 60

housing managers attended



Chapter 7: Outreach Efforts
             

             

Chapter 7: Outreach Efforts 121

SA Scott Savedow provided a presentation, entitled "Criminal and Fraudulent Activity in HUD Public

Housing Programs," to Miami-Dade Housing Agency Tenant Advisory Council members meeting in Miami,

FL. SA Savedow, speaking in both English and Spanish, described HUD OIG's mission and relationship to

HUD and public housing authorities and illustrated the identification and prosecution of subsidized housing

fraud. Approximately 30 council members and public housing tenants attended.



SA Amy Durso provided an overview of HUD OIG's mission and authority and described fraud detection

and enforcement methods used to successfully prosecute subsidized housing fraud at a Kansas City Housing

Authority regional housing conference held in Kansas City, MO. Approximately 50 housing authority

representatives attended.

Community Planning and Development

SAC Rene Febles provided an overview of HUD OIG's investigative priorities and described HUD

community planning and development, public corruption, and mortgage fraud at a Long Island Community

Development Organization meeting held in Westbury, NY. Approximately 30 members attended.



RIGA John Buck and SA Frank Aeillo provided an overview of HUD OIG's mission and role in detecting,

investigating, and preventing waste, fraud, and abuse in HUD's Community Development Block Grant

programs at a meeting of nonprofit organizational leaders and Bristol Township Community Development

personnel in Bristol, PA. In addition, SA Aeillo provided an overview of recent HUD OIG investigations and

prosecutions before leading a question and answer forum.



Acting ASAC James Luu described HUD OIG's mission and authority, provided an overview of the

Davis-Bacon Act and illustrated investigative and prosecutorial challenges with violations, and explained the

importance of record keeping and administrative oversight at a HUD-sponsored Labor Standards Training

seminar held in San Francisco, CA. Approximately 300 community development officials, HUD HOME

Investment Partnerships program grantees, and public housing representatives from California, Nevada,

Arizona, and Guam attended.



SA Jesse Barragan provided an overview of HUD OIG’s mission, priorities, and organizational structure at

a meeting with California Department of Housing and Community Development personnel in Sacramento,

CA. Linda Nichols, Community and Economic Development chief , and employees from the Community

Development Block Grant Division attended.
             

             

122

Law Enforcement Outreach

SAC Phyllis Grissom Robinson discussed mortgage fraud issues specific to Utah in a meeting held at the

U.S. Attorney's Office in Salt Lake City, UT. U.S. Attorney General Michael B. Mukasey and U.S. Attorney

for the State of Utah, Brett Tolman, attended.



SAC Barry McLaughlin hosted two meetings of the Illinois Mortgage Fraud Working Group in Chicago,

IL. Chicago Title vice president Allison Rabin provided a presentation on antifraud provisions and Appraisal

Research Counselors vice president Russ Haraus illustrated appraisal industry guidelines and trends. More

than 40 representatives from State regulatory agencies and Federal and local law enforcement agencies

attended.



ASACs Ray Espinosa and Brad Geary provided a presentation, entitled "The Latest Trends in Real Estate

Fraud," at a mortgage fraud seminar sponsored by HUD OIG and the Chicago Police Department in

Chicago, IL. In addition, Brenda Grauer, a prosecutor with the Illinois Attorney General's Office, provided an

overview of the Illinois rescue fraud statutes for more than 50 law enforcement, financial institution loss

prevention, and HUD quality assurance staff in attendance.



ASAC George Dobrovic and SA Dave Fredrick presented an overview of HUD OIG and described

mortgage fraud in HUD's Housing Choice Voucher and FHA insurance programs at a meeting of the Cuyahoga

County Mortgage Fraud Task Force in Cleveland, OH. In addition, Dean Wyman, a Special Assistant U.S.

Attorney assigned to the U.S. Bankruptcy Trustees Office, presented an overview of bankruptcy and mortgage

fraud and described joint investigative efforts involving HUD OIG. More than 20 representatives from the

U.S. Attorney's Office, the Ohio State Attorney General's Office, the Cuyahoga County Prosecutor's Office,

the Cuyahoga County Sheriff's Office, the Cuyahoga County Recorder's Office, the City of Solon, OH, and

local law enforcement personnel attended.



ASAC Brad Geary and SA Julien Kubesh provided an overview of HUD OIG and described single-family

and housing assistance fraud schemes at a Minnesota Fraud Investigators Association meeting held in

Minneapolis, MN. More than 50 fraud investigators attended.

Audit-Related Outreach

ARIGA Frederick Smith participated in a meeting of the accounting advisory board for the University of

Northern Colorado School of Business in Greeley, CO. He explained how HUD OIG accomplishes its

mission by conducting independent and objective audits, investigations, and other activities relevant to the

HUD missions; keeps the Secretary, Congress, and the American public fully and currently informed; and

Chapter 7: Outreach Efforts
             

             

Chapter 7: Outreach Efforts 123

works collaboratively with HUD staff and program participants to ensure success in meeting HUD

program goals.



RIGA Ron Hosking participated as a panelist during a session of the Association of Government

Accountants Kansas City Chapter Professional Development Seminar in Kansas City, MO. The topic of the

panel was "Improving Government through Oversight." The other panelists included RIGAs from the

Department of Veterans Affairs OIG and the Social Security Administration OIG. Each of the panelists spoke

about a significant audit that was performed by their agency. RIGA Hosking spoke about the series of late

endorsement audits performed by HUD OIG. He reported that the audits identified more than 7,000 loans,

valued at more than $1 billion, that were submitted by lenders for endorsement more than 60 days after closing

when the borrowers had already missed making mortgage payments.



ARIGA Michael Motulski, Auditor Jodi Desorcy, SAC Peter C. Emerzian, and ASAC Michael Wixted

made a presentation to the acting executive director and principal staff of the Connecticut Housing Finance

Authority (CHFA) in Rocky Hill, CT, to discuss HUD OIG's mission, role, and responsibility with regard to

detecting and investigating fraud, waste, and mismanagement in HUD's multifamily, community planning

and development, and FHA programs. CHFA provided information on its recent program to assist subprime

borrowers' transition to FHA-insured loans. Areas of mutual concern were identified, and channels of

communication were established.



ARIGA Kevin Smullen, SAC Peter C. Emerzian, and ASAC Diane DeChellis made a presentation to the

staff of the Maine State Housing Authority in Augusta, ME, to discuss HUD OIG's mission, role, and

responsibility with regard to detecting and investigating fraud, waste, and mismanagement in HUD's

multifamily, community planning and development, and FHA programs. As a result of the meeting, many

areas of collaboration were identified, and additional training opportunities were discussed for other real estate

industry professional organizations in the State of Maine.



ARIGA Michael Motulski and SAC Peter C. Emerzian made a presentation to the staff of the

Massachusetts Housing Finance Agency in Boston, MA, to discuss HUD OIG's mission, role, and

responsibility with regard to detecting and investigating fraud, waste, and mismanagement in HUD's

multifamily and FHA programs. During the meeting, the anticipated FHA market share increase in

Massachusetts and FHA home equity conversion mortgages (HECM) were discussed, as well as OIG's role in

monitoring these programs.



RIGA John Dvorak and SAC Peter C. Emerzian made a presentation to the staff of the New Hampshire

Housing Finance Agency in Bedford, NH, to discuss HUD OIG's mission, role, and responsibility with regard

to detecting and investigating fraud, waste, and mismanagement in HUD's Section 8, multifamily, and FHA
             

             

124

programs. During the meeting, the anticipated FHA market share increase in New Hampshire and FHA

HECM were discussed, as well as OIG's role in monitoring these programs. In addition, the use of HUD's

Enterprise Income Verification (EIV) system to monitor and detect Section 8 tenant fraud was discussed.



ARIGA Michael Motulski, SAC Peter C. Emerzian, ASAC Michael Wixted, and SA Alexander Rosania

made a presentation to the staff of the Rhode Island Housing Agency (RIHA) in Providence, RI, to discuss

HUD OIG's mission, role, and responsibility with regard to detecting and investigating fraud, waste, and

mismanagement in programs administered by RIHA. These programs include HUD's Community

Development Block Grant, HOME Investment Partnerships, Section 8, multifamily, and FHA programs.

During the meeting, RIHA origination of FHA loans including FHA HECM to assist in the mortgage crisis in

Rhode Island and were discussed, as well as the assistance OIG could provide in monitoring these programs.



SAC James Todak and RIGA Joan Hobbs served on a four-member panel at the NAHRO conference held

in San Diego, CA. The national conference had approximately 450 people in attendance, and the topic of the

session was “Fraud Detection: Preserving Assets and Saving Public Dollars.” Most of the attendees were

commissioners and executive directors of public housing authorities. Discussion and questions centered around

how housing authorities can prevent fraud within their own ranks and the legal issues surrounding the

performance of annual background checks.



RIGA Heath Wolfe and Auditor Cynthia Fierro participated in the Federal Executive Board's 2008

Government Job Fair at Roosevelt University in Chicago, IL. They spoke to students about HUD OIG's

mission and the benefits of pursuing student volunteer and auditing positions with HUD OIG. They

informed students that OIG has student volunteer opportunities at its Chicago, IL; Detroit, MI; and

Columbus, OH, offices and accepted resumes from students interested in both a career and student volunteer

position with HUD OIG.



RIGA Heath Wolfe and ARIGA Kelly Anderson participated in the Loyola University Chicago Spring

2008 "Call to Serve" Non-Profit Job and Internship Fair in Chicago, IL. They spoke with students about

OIG's mission and the benefits of pursuing student volunteer and career positions with HUD OIG and

accepted resumes from students interested in the student volunteer program at OIG's Chicago, IL; Columbus,

OH; or Detroit, MI, Offices of Audit and careers with HUD OIG.



RIGA Edgar Moore and SAC Rene Febles met with Mr. Bob Young, Acting Assistant Deputy Secretary for

Field Policy and Management, the HUD Region 2 Director, and other Region 2 officials in New York, NY.

They provided an overview of the responsibilities of the Region 2 Offices of Audit and Investigation and

explained the general audit and investigation areas that OIG has focused on this year based on its strategic plan.



Chapter 7: Outreach Efforts
             

             

Chapter 7: Outreach Efforts 125

ARIGA Karen Campbell and Senior Auditor Mary Rose Aylwin met with Robert Scofield, Director of the

HUD field office in Albany, NY, to discuss the OIG mission and annual audit plan, process for audit planning

and selection of auditees, and possible future audits within the Albany field office's jurisdiction. They also

discussed the results of recent audits conducted by OIG Albany staff. In addition, they discussed HUD's

centralized EIV system and debt collection activity at HUD's Financial Operations Center's Asset Recovery

Division in Albany. The EIV system is a HUD-provided Internet-based wage and benefit tool that allows

public housing agencies and multifamily program users to validate the accuracy of tenant-reported income

from an independent source that systematically and uniformly maintains income information in computerized

form.



Senior Auditors Mike Hall, Larry McMillion, and Joanna Varenhorst made a presentation to a graduate

auditing class at St. Mary's University in San Antonio, TX. The team described the OIG mission, provided an

overview of HUD OIG, discussed the difference between private industry and the public sector, and described

the benefits of pursuing a career with HUD OIG. They also discussed recent audit reports, the HUD OIG

annual report, and how OIG has impacted the community.



Senior Auditor Martin Bardak and IT (information technology) Specialist Adam Bernstein participated in

the Federal Cyber Service Scholarship for Service program 2008 annual job fair and symposium in

Washington, DC. They spoke with students about careers with HUD OIG and collected resumes from

students interested in internships and full-time positions. HUD OIG was one of more than 35 federal

agencies participating in the job fair, which hosts an elite cadre of specialists dedicated to protecting the Nation's

information technology infrastructure.

Other Outreach

RIGA Heath Wolfe made a presentation to Loyola University Chicago's Beta Alpha Psi in Chicago, IL. He

spoke to students about the benefits of pursuing student volunteer and auditing positions with HUD OIG, as

well as OIG's overall mission. Students were informed that OIG has student volunteer opportunities in

Chicago, IL; Columbus, OH; and Detroit, MI. More than 40 students attended the presentation.



RIGA Heath Wolfe made a presentation to the University of Illinois-Springfield's Student Accounting

Society in Springfield, IL. He spoke to students and faculty about the benefits of pursuing student volunteer

and auditing positions with HUD OIG, as well as OIG's overall mission. Students were informed that OIG

has student volunteer opportunities in Chicago, IL; Columbus, OH; and Detroit, MI.



RIGA Heath Wolfe and ARIGA Carrie Gray participated in the 2008 Springfield Collegiate Fair in

Springfield, IL. The Fair was sponsored by the University of Illinois-Springfield, Robert Morris College, and

Lincoln Land Community College. RIGA Wolfe and ARIGA Gray spoke with students about OIG's mission

and the benefits of pursuing student volunteer and career positions with the HUD OIG. They accepted
             

             

126

resumes from students interested in the student volunteer program at OIG's Chicago, IL; Columbus, OH; or

Detroit, MI, Offices of Audit and careers with HUD OIG.



RIGA Heath Wolfe and ARIGA Carrie Gray participated in the Career Network '08 Career Fair in

Edwardsville, IL. The fair was sponsored by Southern Illinois University at Edwardsville, Blackburn College,

Greenville College, Illinois College, McKendree University, and Principia College. RIGA Wolfe and ARIGA

Gray spoke with interested students about HUD OIG's mission and the benefits of pursuing a career with

HUD OIG. They accepted resumes from students interested in the student volunteer program and careers

with HUD OIG.



RIGA Heath Wolfe and ARIGA Carrie Gray participated in the Bradley University's Social Service

Government Career Fair in Peoria, IL. They spoke with students about OIG's mission and the benefits of

pursuing student volunteer and career positions with HUD OIG. They accepted resumes from students

interested in a career or a student volunteer position with HUD OIG Offices of Audit in St. Louis, MO;

Chicago, IL; Columbus, OH; or Detroit, MI.



ARIGA Carrie Gray and Auditor Tina Venker participated in the University of Missouri-St. Louis Spring

Internship and Job Fair in St. Louis, MO. They spoke with interested students about HUD OIG's mission

and the benefits of pursuing a career with HUD OIG. They accepted resumes from students interested in the

student volunteer program and careers with HUD OIG.



ARIGAs Carrie Gray and Brent Bowen participated in the Southern Illinois University Edwardsville,

Chicago, IL, career fair, along with more than 100 other employers. They spoke with more than 50 students

about HUD OIG's mission and the benefits of pursing a career and/or a student volunteer position with HUD

OIG. They accepted resumes from students interested in a career or a student volunteer position with HUD

OIG Offices of Audit in St. Louis, MO, or Columbus, OH.



ARIGA Kim Randall and Senior Auditor Dan Tipton attended the University of Central Missouri Career

Fair in Warrensburg, MO. They spoke with students about careers with HUD OIG and collected resumes

from students interested in internships and full-time positions. HUD OIG was one of more than 150

employers participating in the career fair.



Chapter 7: Outreach Efforts
               

               

Chapter 8

Review of

Policy Directives
             

             

128

Reviewing and making recommendations on legislation, regulations, and policy issues is a critical part of

the U.S. Department of Housing and Urban Development, Office of Inspector General's (HUD OIG)

responsibilities under the Inspector General Act. During this 6-month reporting period, OIG reviewed 111

issuances. This chapter highlights some of OIG's prior comments on notices, comments for this reporting

period, and other policy directives.

Proposed Legislation

Due to the collapse of the subprime mortgage market and resulting increase in foreclosures, Congress has

proposed a number of legislative solutions. OIG continues to review the proposed legislation and HUD's role.

As of this reporting period, none of the proposed legislation has become law. OIG plans to continue to

monitor Congress' efforts in this area.

FHA Modernization

The U.S. Department of Housing and Urban Development (HUD) has proposed legislation that would

allow increased flexibility in setting insurance premiums based on risk and reduce downpayment requirements.

As noted in the President's fiscal year 2008 budget, through the Expanding Homeownership Act of 2006,

HUD has sought to provide workable solutions for homebuyers who do not qualify for prime financing, giving

them more affordable and safer ways to achieve the "American dream." The key components of the legislative

proposal are to

- Modify the current statutory 3 percent minimum downpayment.

- Create a new, risk-based insurance premium structure for the Federal Housing Administration (FHA)

that would match the premium amount with the credit profile of the borrower.

- Increase and simplify FHA's loan limits.

In the last Semiannual Report, OIG published its concerns related to the proposed legislation. As of this

report, Congress has not passed the proposed legislation.

Proposed Rules

HUD proposed Mortgagee Letter 2008-05, Expansion of FHASecure and Clarification on Cash-Out

Refinance. OIG nonconcurred with an initial draft of the mortgagee letter. OIG raised concerns regarding

these higher risk loans and HUD's plans to monitor the performance of the loans. After considering our input,

FHA provided additional documents regarding the risk to the FHA fund and its plans for monitoring the

performance of the loans.

OIG continues to work with HUD to resolve other nonconcurrence.



Chapter 8: Review of Policy Directives
               

               

Chapter 9

Audit

Resolution
             

             

130

In the audit resolution process, Office of Inspector General (OIG) and U.S. Department of Housing and

Urban Development (HUD) management agree upon the needed actions and timeframes for resolving audit

recommendations. Through this process, OIG hopes to achieve measurable improvements in HUD programs

and operations. The overall responsibility for assuring that the agreed-upon changes are implemented rests

with HUD managers. This chapter describes significant management decisions with which OIG disagrees. It

also contains a status report on HUD's implementation of the Federal Financial Management Improvement

Act of 1996 (FFMIA). In addition to this chapter on audit resolution, see appendix 2, table B, "Significant

Audit Reports Described in Previous Semiannual Reports in Which Final Action Had Not Been Completed as

of March 31, 2008."

Audit Reports Issued before Start of Period with No Management

Decision as of March 31, 2008

Office of Housing, Washington, DC

Single-Family Mortgage Insurance Claims Issued July 11, 2006. The Inspector General referred this issue to

the Deputy Secretary on December 4, 2006, because agreement could not be reached with the Office of

Housing. The three recommendations relate to the Office of Housing's not independently determining that

mortgage loans insured under the Mutual Mortgage Insurance Fund met program requirements after paying

billions in single-family insurance claims. During the period October 1, 2003, through June 3, 2005, HUD

received and paid claims on loans for which the lender did not show that the borrower (1) was able to make the

required monthly payments, (2) made the minimum investment in the property, and (3) was creditworthy.

HUD paid the claims and did not subsequently review the loan files for compliance with the program

requirements, fraud, and/or misrepresentations. HUD relied upon lender certifications that loans were

eligible and contained all required supporting documents, a preendorsement review of the insurance

applications for key documents, and risk-based compliance testing of recently insured loans. We estimate that

final HUD costs for claims that HUD's files did not support as meeting program requirements during the

period reviewed totaled $356 million on those claims for which all revenues and expenses were finalized.

In his February 23, 2007, response, the Deputy Secretary stated support of OIG's objective and agreed

with the overall conclusions reached. The Deputy Secretary directed the Office of Housing to immediately

begin implementing procedures in conjunction with and acceptable to OIG to effect the recommendations.

However, the Office of Housing did not submit its plan to implement the Deputy Secretary's directive until

March 30, 2007. Even then, the plan was unacceptable. Then on June 11, 2007, the Office of Housing

submitted an additional proposal, which was also rejected by OIG. The Office of Housing's proposal does not

provide for the development of procedures to take appropriate actions for all claims with inadequate

documentation and essentially renders the recommendations ineffective. Since June 2007, we have received

no further correspondence from the Office of Housing on this matter. The recommendations remain open,

without management decisions, until the Office of Housing submits a corrective action plan that accurately

reflects the Deputy Secretary's instructions and demonstrates a good faith effort to implement OIG's

recommendations. (Report No. 2006-SE-0001).

Chapter 9: Audit Resolution
             

             

Chapter 9: Audit Resolution 131

Significantly Revised Management Decisions

Section 5(a)(11) of the Inspector General Act, as amended, requires that OIG report information

concerning the reasons for any significant revised management decisions made during the reporting period.

During the current reporting period, there were significant revised management decisions on two audits.

Carbondale Nursing Home - Carbondale, PA

Issue Date: March 25, 2004. In response to an audit request by the Philadelphia Multifamily Hub, we

audited Carbondale Nursing Home (project), a Section 232 HUD-insured project owned by CNH,

Incorporated (owner). The purpose of our audit was to assess the owner's compliance with the terms and

conditions of the regulatory agreement and all other applicable HUD requirements.

The owner did not comply with the regulatory agreement and other HUD requirements in operating the

project. In total, the owner made nearly $1.3 million in ineligible and unsupported payments from project

funds. Specifically, the owner received nearly $375,000 in ineligible salary payments, collected more than

$170,000 in ineligible distributions/repayment of advances, paid nearly $486,000 in ineligible expenses for

another company, disbursed nearly $133,000 in ineligible extension fees, and paid nearly $98,000 in

unsupported loan payments. Several staff members at the project, including the controller and administrator,

stated that the owner was not aware of the HUD requirements prohibiting these expenditures. If the owner

had complied with HUD requirements and used project funds for only necessary operating expenses of the

project, the owner could have used these funds to pay the mortgage costs (principal and interest) for more than

2 years and possibly avoided bankruptcy and default on the HUD-insured loan.

We recommended that HUD require the owner to repay nearly $1.2 million in ineligible expenditures and

either support or repay the nearly $98,000 in unsupported expenditures and take appropriate administrative

action against the owner. On April 30, 2004, HUD sent the owner a letter requiring her to repay all

questioned costs identified in the audit report. On May 10, 2004, HUD received correspondence from the

owner's attorneys stating that they were representing the owner in her Chapter 11 bankruptcy proceedings and

questioning HUD's authority to collect these funds. HUD responded by explaining that it is authorized to

demand payment pursuant to the regulatory agreement, and HUD again requested repayment of the

questioned costs.

Due to the owner's unresponsiveness, HUD requested the assistance of the U.S. Attorney's Office to

resolve this matter. On June 15, 2005, the U.S. Attorney's Office advised the owner's attorney that HUD had

referred the matter to it for resolution. On August 29, 2005, the owner's attorney notified the U.S. Attorney's

Office that he was no longer representing the owner and had advised the owner to obtain new counsel. The

U.S. Attorney's Office then contacted the owner directly, advising that the owner or an attorney on the owner's

behalf contact the U.S. Attorney's Office to discuss the matter. In the interim, a portion of the ineligible costs

were recovered. HUD received a check from the lender in the amount of nearly $133,000 for the reported

ineligible extension fees. The payment reduced the total ineligible costs from nearly $1.2 million to just over

$1 million. No further recoveries were made.

On January 17, 2007, HUD received notification that the U.S. Attorney's Office had decided not to

initiate civil proceedings against the owner. HUD continued to believe that the matter should be pursued,

however, and attempted to persuade the U.S. Attorney's Office to reopen the case to no avail. On May 17,
             

             

132

2007, HUD was notified that the owner had passed away. On September 14, 2007, the Director of

Philadelphia's Multifamily Hub sent a letter to HUD's Departmental Claims Officer requesting a full

write-off of the remaining disallowed costs due to the above events. Pursuant to the Federal Claims Collection

Standards, 31 CFR [Code of Federal Regulations] 903.1(b), the U.S. Department of Justice authorized HUD's

Departmental Claims Officer to terminate collection action on January 16, 2008. On January 31, 2008,

disallowed costs of more than $1.1 million were written off, and the audit was closed. (Audit Report:

2004-PH-1004)

Idaho Housing and Finance Association, Boise, ID

Issue Date: September 16, 2005. HUD OIG audited Idaho Housing and Finance Association in Boise, ID.

The audit objectives were to determine whether Idaho Housing followed Federal regulation sand HUD

guidelines when it (1) allowed project owners to prepay project mortgages and (2) refunded bonds in 1994.

Idaho Housing did not properly follow Federal regulations and HUD guidelines when it allowed 10 project

owners to prepay project mortgages. As a result, HUD paid more than $8.5 million in subsidies in excess of

fair market rents for these projects. Further, Idaho Housing did not properly follow Federal regulations and

HUD guidelines when it did not return HUD's 50 percent share of the savings of more than $6 million

generated from the 1994 bond refunding for 30 McKinney Act projects and did not use more than $997,000

of its 50 percent of the McKinney Act savings appropriately. As a result, the McKinney Act savings were not

available for HUD programs, including those administered by Idaho Housing.

The original recommendation 2A stated that Idaho Housing should reimburse HUD from nonfederal

funds nearly $6.2 million for its share of the McKinney Act savings resulting from the 1994 bond refund. The

original recommendation 2B stated that Idaho Housing should reimburse its Federal program accounts from

nonfederal funds nearly $998,000 for its portion of the McKinney Act savings that was not appropriately

expended. Specifically, owners of nonprofit and limited distribution properties received funds in excess of the

allowable limited distribution amount.

On December 13, 2005, HUD agreed that OIG should amend recommendation 2B for consideration of

just over $1 million in excessive distributions that had been included in the amount in recommendation 2A,

which was closed due to a HUD Office of General Counsel decision that the McKinney Act did not apply to

these projects. On June 5, 2006, Idaho Housing sent an appeal to Secretary Jackson to remove

recommendation 2B on the question of whether loan funds constituted owner distributions. The Office of

General Counsel reviewed the appeal and in a March 14, 2008, memorandum to the Multifamily Hub

Director in Seattle, stated that it had determined that the proceeds from the refunding program were not

considered distributions and were, therefore, not subject to HUD's limited distribution rules. As a result,

HUD requested that recommendation 2B be withdrawn and the associated monetary amounts eliminated.

OIG agreed to eliminate recommendation 2B. (Audit Report: 2005-SE-1008)

Significant Management Decision with Which OIG Disagrees

During the reporting period, there were no significant management decisions with which OIG

disagreed.

Chapter 9: Audit Resolution
             

             

133

Federal Financial Management Improvement Act of 1996

In fiscal year 2007, HUD did not substantially comply with FFMIA. In this regard, HUD's financial

management systems did not substantially comply with Federal financial management system requirements.

FFMIA requires that HUD implement a remediation plan that will bring financial systems into

compliance with Federal financial management system requirements within 3 years or obtain Office of

Management and Budget (OMB) concurrence if more time is needed.

FFMIA requires OIG to report in its Semiannual Reports to the Congress instances and reasons when an

agency has not met the intermediate target dates established in its mediation plan required by FFMIA. In April

1998, HUD determined that 38 of its systems were not in substantial compliance with FFMIA. At the end of

2007, the Department reported that 2 of its 42 financial management systems were not in substantial

compliance with FFMIA. These two systems are the HUD Procurement System (HPS) and Small Purchase

System (SPS).



Chapter 9: Audit Resolution
               

               

Appendix 1

Audit Reports

Issued
             

             

136

Internal Reports

15 Audit Reports

Chief Financial Officer (2 Reports)

2008-DP-0003 FY 2007 Review of Information Systems Controls in Support of the Financial

Statements Audit, 03/04/2008.

2008-FO-0003 Additional Details to Supplement Our Report on HUD's FY 2007and 2006 Financial

Statements, 11/14/2007. Better use: $922,300,000.

Chief Information Officer (1 Report)

2008-DP-0001 Review of Unisys Performance and Security Controls, 10/19/2007.

Community Planning and Development (2 Reports)

2008-NY-0001 HUD's Monitoring Controls and Procedures Regarding the CDBG Program Were

Not Adequate, 12/31/2007.

2008-PH-0001 HUD's Process for Tracking the American Dream Downpayment Initiative Had

Weaknesses, 03/26/2008.

Government National Mortgage Association (1 Report)

2008-FO-0001 Audit of the Government National Mortgage Association's Financial Statements for

FY 2007 and 2006, 11/07/2007.

Housing (6 Reports)

2008-BO-0001 Office of Multifamily Housing Boston Hub Staff Effectively Used Contract Fee

Inspectors, 02/14/2008.

2008-DP-0002 Review of FHA Controls over Its Information Technology Resources,10/31/2007.

2008-FO-0002 Audit of the FHA's Financial Statements for FY 2007 and 2006, 11/08/2007.

2008-KC-0001 HUD's Quality Assurance Division Did Not Always Resolve Materially Deficient or

Potentially Fraudulent Loans Consistently, 01/14/2008. Questioned: $233,351;

Better use: $722,652.

2008-LA-0001 The Los Angeles Multifamily Hub Did Not Properly Monitor Its Performance-Based

Contract Administrator, Los Angeles LOMOD, 11/05/2007. Questioned: $1,465,219;

Better use: $38,839.

2008-LA-0002 HUD Did Not Have Adequate Internal Controls over Its FHA Appraiser Roster,

03/04/2008.

Public and Indian Housing (3 Reports)

2008-AO-0001 HUD Had a Less Than 1 Percent Error Rate in Housing Ineligible Participants for

Katrina Disaster Housing Assistance Program and Disaster Voucher Program Disaster

Housing Assistance, 12/04/2007. Questioned: $760,317; Better use: $153,808.

2008-AT-0001 The Atlanta PIH Did Not Ensure That the Housing Authority of DeKalb County

Accurately Implemented Its Memorandum of Agreement, 01/10/2008.

Appendix 1: Audit Reports Issued
             

             

Appendix 1: Audit Reports Issued 137

2008-KC-0002 HUD Did Not Ensure That Housing Authorities Properly Administered the

Community Service and Self-Sufficiency Requirement, 03/24/2008. Better use:

$257,712,000.

Audit-Related Memoranda1

Community Planning and Development (1 Report)

2008-NY-0801 CDBG Disaster Recovery Assistance Funds Lower Manhattan Development

Corporation, New York, NY, 10/23/2007.

Public and Indian Housing (2 Reports)

2008-AO-0801 Review of Duplication of Participants Benefits under HUD's Katrina Disaster

Housing Assistance Program and Disaster Voucher Program, 03/28/2008. Questioned:

$27,802.

2008-AT-0801 Corrective Action Verification, Miami-Dade Housing Agency Did Not Ensure

Section 8-Assisted Units Met Housing Quality Standards, 2006-AT-1001, 02/11/2008.



External Reports

47 Audit Reports

Community Planning and Development (17 Reports)

2008-AO-1001 State of Louisiana's Road Home Program, ICF, Did Not Always Provide Contract

Deliverables As Required, Baton Rouge, LA, 12/19/2007.

2008-AO-1002 State of Louisiana, Road Home Program, Funded 418 Grants Coded Ineligible or

Lacking an Eligibility Determination, Baton Rouge, LA, 01/30/2008. Questioned:

$15,528,378; Unsupported: $14,785,034.

2008-AT-1002 The Municipality of Canovanas Needs to Improve Administration of Its CDBG

Program, Canovanas, PR, 11/15/2007. Questioned: $1,951,996; Unsupported:

$1,822,026.

2008-AT-1003 The City of Jacksonville Lacked Proper Support for Some Subrecipient Purchases and

Expenditures, Jacksonville, FL, 12/26/2007. Questioned: $190,552; Unsupported:

$34,552.

2008-AT-1004 The City of West Palm Beach Did Not Properly Administer Its CDBG Program, West

Palm Beach, FL, 01/09/2008. Questioned: $3,397,170; Unsupported: $3,397,170;

Better use: $157,122.

1

 The memorandum format is used to communicate the results of reviews not performed in accordance with

generallyaccepted government audit standards, to close out assignments with no findings and recommendations,

to respond to requests for information, to report on the results of a survey, to report results, or to report the results

of civil actions or settlements.
             

             

138

2008-AT-1005 The City of Fort Lauderdale Did Not Properly Administer Its CDBG Program, Fort

Lauderdale, FL, 01/11/2008. Questioned: $5,114,130; Unsupported: $5,114,130;

Better use: $722,377.

2008-AT-1006 Fulton County Lacked Adequate Controls Over Its HOME Program, Atlanta, GA,

03/07/2008. Questioned: $4,285,846; Unsupported: $1,780,971; Better use:

$2,159,649.

2008-BO-1001 The City of Chicopee Did Not Properly Administer More Than $4.3 Million in CDBG

Funds, Chicopee, MA, 11/07/2007. Questioned: $4,320,387; Unsupported:

$3,106,886; Better use: $62,975.

2008-BO-1003 The Maine State Housing Authority Needs to Improve Controls over Its

Administration of the HOME Program, Augusta, ME, 01/18/2008. Better use:

$13,686.

2008-FW-1004 Community Development Corporation of Brownsville Did Not Use Its Housing

Counseling Grants for the Intended Purpose, Brownsville, TX, 12/18/2007.

Questioned: $716,309; Unsupported: $539,170.

2008-FW-1007 City of Dallas Incurred Ineligible and Unsupported Expenses for Its HOPWA Grant,

Dallas, TX, 03/20/2008. Questioned: $165,232; Unsupported: $138,979; Better use:

$16,345.

2008-LA-1001 The City of Huntington Park Did Not Always Ensure That HOME Program

Requirements Were Met, Huntington Park, CA, 11/01/2007. Questioned: $296,599;

Unsupported: $296,599; Better use: $204,442.

2008-LA-1003 Home for Life Foundation Did Not Properly Administer Its Supportive Housing

Program Grants, Los Angeles, CA, 12/18/2007. Questioned: $2,124,624; Unsupported:

$2,119,137.

2008-LA-1004 The City of Los Angeles Housing Department Did Not Adequately Monitor HOME

Program-Assisted Rehabilitation Construction, Los Angeles, CA, 01/15/2008.

Questioned: $6,073,275; Unsupported: $6,073,275; Better use: $72,835.

2008-NY-1001 The City of New Rochelle Had Administrative Control Weaknesses in Its HOME

Program, New Rochelle, NY, 11/08/2007. Questioned: $12,000; Unsupported:

$12,000.

2008-NY-1003 The City of New York's Department of Housing Preservation and Development Had

Administrative Weaknesses in Its HOME Program, New York, NY, 01/23/2008.

Questioned: $34,100,000.

2008-NY-1004 Lower Manhattan Development Corporation CDBG Disaster Recovery Assistance

Funds, New York, NY, 03/31/2008. Better use: $6,782.

Housing (7 Reports)

2008-BO-1004 Multifamily Project Deficiencies Resulted in More Than $1.1 Million in Cost

Exceptions for Mohegan Commons, Norwich, CT, 02/04/2008. Questioned: $926,898;

Better Use: $267,344.

2008-BO-1005 Multifamily Project Deficiencies Resulted in More Than $2.8 Million in Cost

Exceptions for Windham Heights Apartments, Windham, CT, 02/05/2008.

Questioned: $2,510,318; Better use: $317,675.

Appendix 1: Audit Reports Issued
             

             

Appendix 1: Audit Reports Issued 139

2008-FW-1008 The Owner of Century Mission Oaks Violated Its Regulatory Agreement with HUD,

San Antonio, TX, 03/21/2008. Questioned: $3,286,489; Unsupported: $3,023,965.

2008-LA-1006 Phoenix Apartments Did Not Use Project Funds in Accordance with HUD

Requirements, Concord, CA, 02/04/2008. Questioned: $207,971; Unsupported:

$118,220.

2008-NY-1002 Richard A. Hutchens and Associates, Management Agent, Used Project Funds for

Ineligible and/or Unsupported Costs, Buffalo, NY, 12/05/2007. Questioned:

$1,643,726; Unsupported: $1,056,282; Better use: $91,650.

2008-PH-1002 National City Mortgage Generally Complied with HUD Requirements in Originating

FHA-Insured Single-Family Loans, Plymouth Meeting, PA, 11/20/2007. Questioned:

$857; Better use: $57,533.

2008-PH-1005 Elders Place, Incorporated, Did Not Administer Project Operating Funds in

Accordance with HUD Requirements, Philadelphia, PA, 03/28/2008. Questioned:

$383,376; Unsupported: $309,929; Better use: $13,155.

Public and Indian Housing (23 Reports)

2008-AT-1001 The Municipality of Ponce Needs to Improve Controls over Its Section 8 Program,

Ponce, PR, 11/08/2007. Better use: $447,300.

2008-BO-1002 Holyoke Housing Authority's Lack of Management Controls Resulted in Section 8

Units Not Meeting Housing Quality Standards, Holyoke, MA, 11/26/2007.

Questioned: $6,193; Better use: $1,654,350.

2008-CH-1001 The Housing Authority of the City of Michigan City Failed to Follow Federal

Requirements for Its Nonprofit Development Activities, Michigan City, IN,

11/19/2007. Questioned: $1,520,878; Better use: $1,814,838.

2008-CH-1002 The Akron Metropolitan Housing Authority Lacked Adequate Controls over Its 5(h)

Homeownership Proceeds, Akron, OH, 01/09/2008. Better use: $384,691.

2008-CH-1003 The Highland Park Housing Commission Did Not Effectively Administer Its Public

Housing and Capital Fund Programs, Highland Park, MI, 02/15/2008. Questioned:

$346,864; Unsupported: $297,199; Better use: $70,437.

2008-DE-1001 The Housing Authority of the City of Colorado Springs Improperly Managed

Contracts and Improperly Maintained Its Section 8 Waiting List, Colorado Springs,

CO, 11/27/2007.

2008-DE-1002 The Housing Authority of the City of Brighton Did Not Maintain Proper Inventory

Records and Improperly Awarded Contracts, Brighton, CO, 03/18/2008.

2008-FW-1001 The Housing Authorities of the City of Konawa, City of Langston, City of Pauls

Valley, City of Wynnewood, Town of Cheyenne, and Caddo Electric Cooperative

Improperly Awarded Their Management Contracts and Did Not Manage Certain

Operations or Administer Funds Properly, Ada, OK, 10/26/2007. Questioned:

$205,174; Unsupported: $194,716; Better use: $84,332.

2008-FW-1002 The Shreveport Housing Authority Did Not Ensure That Section 8 Units Met

Housing Quality Standards, Shreveport, LA, 11/28/2007. Better use: $6,145,796.
             

             

140

2008-FW-1003 The Dallas Housing Authority Mismanaged Its Portable Vouchers, Dallas, TX,

12/05/2007. Questioned: $3,789,254; Unsupported: $3,789,254.

2008-FW-1005 The Housing Authority of the City of McKinney Inappropriately Advanced Funds and

Transferred Real Estate to Its Not-for-Profit Affiliate, McKinney, TX, 01/07/2008.

Questioned: $994,546; Unsupported: $79,059.

2008-FW-1006 Dallas Housing Authority Management Failed to Implement Internal Controls over Its

Housing Choice Voucher Program, Dallas, TX, 03/20/2008. Questioned: $32,440,786;

Unsupported: $32,440,786; Better use: $648,530.

2008-KC-1001 The Douglas County Housing Authority Improperly Encumbered and Spent Its

Public Housing Funds, Omaha, NE, 02/11/2008. Questioned: $925,520; Unsupported:

$729,361; Better use: $2,116,159.

2008-KC-1002 The Schuyler Housing Authority Improperly Used Public Housing Funds to Support a

Non-HUD Assisted Living Program, Schuyler, NE, 02/20/2008. Questioned: $84,133;

Better use: $102,000.

2008-LA-1002 The Housing Authority of the City of Napa Did Not Adequately Determine and

Support Section 8 Rents, Napa, CA, 11/30/2007. Questioned: $63,466.

2008-LA-1005 The Anaheim Housing Authority Did Not Always Operate Its Section 8 Housing Choice

Voucher Program Effectively, Anaheim, CA, 01/16/2008. Questioned: $6,297;

Unsupported: $200; Better use: $90.

2008-LA-1007 The Housing Authority of the County of Los Angeles Did Not Adequately Administer

Its Section 8 Voucher Program, Los Angeles, CA, 02/08/2008. Questioned: $3,702,296;

Unsupported: $5,860; Better use: $2,838.

2008-LA-1008 The Housing Authority of the County of San Joaquin Did Not Administer Capital

Funds in Accordance with HUD Requirements, Stockton, CA, 03/06/2008.

Questioned: $292,227; Unsupported: $1,346; Better use: $77,188.

2008-PH-1001 The District of Columbia Housing Authority Did Not Ensure That Its Program Units

Met Housing Quality Standards under Its MTW Program, Washington, DC,

11/05/2007. Questioned: $192,821; Better use: $21,743,120.

2008-PH-1003 The Housing Authority of the City of Allentown Needs to Settle Interfund Accounts

Monthly and Revise Its Method of Allocating Administrative Salary and Benefit Costs,

Allentown, PA, 11/21/2007. Questioned: $910,946; Better use: $926,726.

2008-PH-1004 The Housing Authority of Baltimore City Generally Had Adequate Controls over Its

Tenant Files, Baltimore, MD, 12/19/2007. Questioned: $3,193; Better use:

$2,596.

2008-SE-1001 Accounting for Program Income from NAHASDA-Assisted 1937 Act Housing Projects

at Warm Springs Housing Authority, Warm Springs, OR, 10/30/2007. Questioned:

$1,613,071; Unsupported: $1,613,071.

2008-SE-1002 Oneida Housing Authority Did Not Properly Recognize and Use Program Income

from Native American Housing Assistance and Self-Determination Act-Assisted

1937 Act Housing Projects, Oneida, WI, 02/20/2008. Questioned: $2,228,880;

Unsupported: $2,228,880.

Appendix 1: Audit Reports Issued
             

             

Appendix 1: Audit Reports Issued 141

Audit-Related Memorandums1

Community Planning and Development (1 Report)

2008-AO-1801 The State of Mississippi's and/or Its Contractor's Procedures for and Controls over the

Homeowner's Assistance Grant Program Generally Ensured Eligibility and Prevented

Duplication of Benefits, Jackson, MS, 03/06/2008. Questioned: $20,571.



1

 The memorandum format is used to communicate the results of reviews not performed in accordance with

generallyaccepted government audit standards, to close out assignments with no findings and recommendations,

to respond to requests for information, to report on the results of a survey, to report results, or to report the results

of civil actions or settlements.
               

               

Appendix 2

Tables
             

             

144 Appendix 2: Tables

Table A

Audit reports issued prior to start of period

with no management decision at March 31, 2008

* Significant audit reports described in previous semiannual reports

Report number

and title

Reason for lack of

management decision

Issue date/target

for management decision

*2006-SE-0001 Single

Family Mortgage

Insurance Claims

See chapter 9, page 130 07/11/2006
             

             

Appendix 2: Tables 145

Table B

Significant audit reports described in previous semiannual

reports in which final action had not been completed

as of March 31, 2008

Report

number

Report title Issue

date

1997-AT-1003

2001-CH-1007

2002-AT-1002

2002-KC-0002

2002-PH-1005

2003-SE-1002

2004-BO-1004

2004-AO-0001

2004-PH-1003

2004-DP-0002

2004-PH-1008

Municipality of Mayaguez, CDBG and

Section 108 Loan Guarantee Assistance

Programs, Mayaguez, PR

Detroit Housing Commission, Hope VI

Program, Detroit, MI

Housing Authority of the City of

Tupelo, Housing Programs Operations,

Tupelo, MS

Nationwide Survey of HUD's Office of

Housing Section 232 Nursing Home

Program

Philadelphia Regional Alliance of

HUD Tenants, Outreach and Training

Assistance Grant and Intermediary

Technical Assistance Grant,

Philadelphia PA

Tenants Union, Outreach and Training

Assistance Grant and Intermediary

Training Assistance Grant, Seattle, WA

Danbury Housing Authority, Capital

Fund Program, Boston, MA

Award and Administration of LeadBased Paint Hazard Reduction Grants

The Congress of National Black

Churches, Incorporated, Housing

Counseling Program, Washington, DC

Application Control Review of the

Tenant Rental Assistance Certification

System

Safe Haven Outreach Ministry,

Incorporated, Washington, DC

07/01/1997

05/16/2001

07/03/2002

07/31/2002

09/30/2002

12/02/2002

12/05/2003

02/06/2004

02/19/2004

02/25/2004

06/03/2004

Decision

date

Final

action

10/29/1997

09/13/2001

10/31/2002

11/22/2002

03/31/2003

03/31/2003

04/05/2004

06/30/2004

06/18/2004

07/14/2004

08/31/2004

06/30/2009

06/30/2008

04/30/2010

Note 2

04/01/2008

04/01/2008

12/01/2008

04/01/2008

11/15/2008

08/30/2008

Note 2
             

             

146

Report

number

Report title Issue

date

2004-AT-1012

2004-CH-1803

2004-PH-1012

2004-FW-1009

2004-LA-1008

2005-AT-1004

2005-CH-1003

2005-AT-1005

2005-PH-0001

2005-DE-0001

2005-CH-1012

2005-CH-1013

2005-LA-0001

Housing Authority of the City of

Durham, NC

Somerset Point Nursing Home,

Multifamily Equity Skimming,

Shaker Heights, OH

Mortgage America Bankers, LLC,

Nonsupervised Loan Correspondent,

Kensington, MD

Mays Property Management,Inc.,

Multifamily Management Agent,

Little Rock, AR

United States Veterans Initiative,

Inc., Inglewood, CA

Housing Authority of the City of

Durham, NC

Royal Oak Township Housing

Commission, Public Housing

Program, Ferndale, MI

Pan American Financial Corporation,

Nonsupervised Direct Endorsement

Lender, Guaynabo, PR

Criteria Governing Local Government

Participation in HUD's Single Family

Property Disposition Discount Sales

Program

HUD's Controls over FHA Claims

Payments

Savanna Trace Apartments Multifamily

Equity Skimming, Kalamazoo, MI

Ivan Woods Senior Apartments

Multifamily Equity Skimming,

Lansing, MI

Single Family Preforeclosure

SaleProgram

08/02/2004

08/09/2004

09/10/2004

09/17/2004

09/27/2004

11/19/2004

11/29/2004

01/27/2005

03/29/2005

05/12/2005

08/04/2005

08/05/2005

09/13/2005

Decision

date

Final

action

11/29/2004

08/09/2004

01/06/2005

02/23/2005

03/31/2005

03/15/2005

03/29/2005

05/17/2005

07/27/2005

09/09/2005

12/28/2005

12/28/2005

01/10/2006

12/01/2014

07/31/2009

09/21/2008

10/01/2008

04/15/2013

03/15/2015

10/31/2008

05/15/2008

Note 1

Note 1

04/01/2008

04/01/2008

Note 1

Appendix 2: Tables
             

             

147

Report

number

Report title Issue

date

2005-AT-1013

2005-SE-1008

2005-CH-1017

2005-FW-1018

2005-CH-1020

2006-CH-0001

2006-AT-1001

2006-AT-1004

2006-SE-1001

2006-DP-0003

Corporacion Para el Fomento

Economico de la Ciudad Capital

Did Not Administer Its Independent

Capital Fund in Accordance with

HUD Requirements, San Juan,

PR

Idaho Housing and Finance

Association, Boise, ID

Flint Housing Commission, Section 8

Housing Program, Flint, MI

The Housing Authority of the City

of Houston Violated HUD

Regulations Concerning Section 8

Housing Choice Voucher Tenants

and Units, Houston, TX

Housing Authority of the City of

Gary, Section 8 Housing Program,

Gary, IN

Real Estate Assessment Center's

Physical Condition Assessment

Was Compromised

Miami Dade Housing Agency Did

Not Ensure Section 8 Assisted Units

Met Housing Quality Standards,

Miami, FL

The Housing Authority of the City

of Prichard Did Not Ensure Section 8

Subsidy Payments Were for Eligible

Units, Tenants, and Landlords,

Prichard, AL

Idaho Housing and Finance

Association Did Not Monitor

Subsidized Multifamily Projects in

Accordance with Regulations or Its

Annual Contributions Contract

with HUD, Boise, ID

Vulnerability Assessment of HUD's

Computer Network

09/15/2005

09/16/2005

09/23/2005

09/27/2005

09/29/2005

11/30/2005

12/21/2005

01/13/2006

01/26/2006

01/31/2006

Decision

date

Final

action

01/11/2006

03/31/2006

01/20/2006

01/24/2006

01/25/2006

01/10/2006

05/31/2006

04/25/2006

05/23/2006

04/19/2006

05/30/2008

Note 1

01/20/2016

06/30/2008

12/31/2052

11/30/2008

10/01/2008

12/31/2008

12/31/2008

06/30/2008

Appendix 2: Tables
             

             

148

Report

number

Report title Issue

date

2006-NY-1003

2006-LA-1009

2006-LA-1010

2006-BO-1005

2006-CH-1007

2006-AT-1007

2006-CH-1008

2006-LA-1011

The Housing Authority of the City

of Newark's Controls over Bond

Financing Activities, Obtaining

Supporting Documentation, and

Legal Settlements Require

Improvement, Newark, NJ

Fontana Native American Indian

Center Did Not Adequately

Administer Its Supportive Housing

Program Grant, Fontana, CA

The Owner and Agent of Holiday

Apartments, LA PRO 30, and Two

Worlds II Mismanaged Project

Finances and Operations, Los

Angeles, CA

Hartford Housing Authority Had

Housing Choice Voucher Program

Deficiencies Resulting in More Than

$2.6 Million in Costs Exceptions,

Hartford, CT

Huntington National Bank, Supervised

Lender, Generally Complied with

Requirements Regarding Submission

of Late Requests for Endorsement and

Underwriting of Loans, Columbus, OH

The Housing Authority of the City of

Winston-Salem Used More Than $4.9

Million in Operating Subsidies for

Other Programs, Winston-Salem, NC

US Bank NA, Supervised Lender, Did

Not Always Comply with HUD's

Requirements Regarding Late Requests

for Endorsements and Underwriting of

Loans, Minneapolis, MN

Sundial Care Center Used $659,746

in Project Funds for Ineligible and

Undocumented Costs and Was Unable

to Account for Revenue Totaling

$407,454, Modesto, CA

02/14/2006

03/03/2006

03/03/2006

03/10/2006

03/15/2006

03/30/2006

03/31/2006

05/18/2006

Decision

date

Final

action

08/17/2006

03/17/2006

06/23/2006

07/07/2006

09/18/2006

07/20/2006

09/18/2006

09/14/2006

12/31/2008

09/15/2008

04/30/2008

07/31/2008

09/30/2008

07/31/2011

09/30/2008

07/20/2008

Appendix 2: Tables
             

             

149

Report

number

Report title Issue

date

2006-PH-0002

2006-NY-0001

2006-KC-0003

2006-KC-1011

2006-KC-1012

2006-BO-1008

2006-NY-1008

2006-BO-1009

2006-BO-0001

HUD Improperly Admitted the

Housing Authority of Baltimore

City into the MTW Demonstration

Program, Baltimore, MD

HUD's Controls over the Reporting,

Oversight, and Monitoring of the

Housing Counseling Assistance

Program Were Not Adequate

HUD Did Not Ensure That the Omaha

Housing Authority Repaid Its Public

Housing Programs $2.7 Million,

Omaha, NE

The Owner of Wellston Townhouses

in St. Louis County Violated Its

Regulatory Agreement, Wellston, MO

The Owner of HDC Retirement

Village in St. Louis Violated Its

Regulatory Agreement, St. Louis, MO

Hall Commons, Inc., Did Not

Administer Its $4.1 Million Section

202 Capital Advance Construction

Grant in Accordance with Federal

Requirements, Bridgeport, CT

The Freeport Housing Authority Has

Financial and Management Control

Weaknesses, Freeport, NY

The Rhode Island Housing and

Mortgage Finance Corporation

Incorrectly Made More Than $1.8

Million in Section 8 Subsidy Payments

and Released More Than $900,000

from Restricted Residual Receipts

Accounts, Providence, RI

HUD Incorrectly Approved $42

Million in Operating Subsidies for

Phase-Down for Demolition

Add-On Funding

05/31/2006

06/08/2006

06/19/2006

06/29/2006

06/29/2006

06/30/2006

06/30/2006

07/06/2006

07/11/2006

Decision

date

Final

action

10/24/2006

01/08/2007

09/13/2006

09/06/2006

08/31/2006

10/25/2006

12/01/2006

10/24/2006

10/13/2006

10/01/2008

01/31/2009

09/30/2008

10/28/2008

10/30/2008

05/21/2008

06/30/2008

12/01/2009

10/01/2008

Appendix 2: Tables
             

             

150

Report

number

Report title Issue

date

2006-CH-0002

2006-CH-1013

2006-AT-1016

2006-CH-1014

2006-SE-0002

2006-KC-1013

2006-DP-0005

2006-AT-1019

2006-DP-0802

PIH Is Taking Action to Oversee the

Section 202 Mandatory Conversion

Program,Washington, DC

The Ann Arbor Housing

Commission's Administration of Its

Section 8 Housing Choice Voucher

Program Needs to Be Improved, Ann

Arbor, MI

The Municipality of Humacao Did

Not Administer Its CDBG in

Accordance with HUD

Requirements, Humacao, PR

National City Mortgage Company,

Nonsupervised Lender, Did Not

Comply with HUD's Requirements

Regarding Underwriting of Loans

and Quality Control Reviews,

Miamisburg, OH

The Office of Single Family

Housing Expanded Late

Endorsement Eligibility without

Studying Associated Risks

The Columbus Housing Authority

Improperly Expended and

Encumbered Its Public Housing

Funds, Columbus, NE

Review of HUD's Information

Technology Contingency Planning

and Preparedness

The Municipality of Toa Baja Did

Not Administer Its Section 108 Loan

Guarantee Assistance Program in

Accordance with HUD Requirements,

Toa Baja, PR

Assessment of HUD's Compliance

with OMB Memorandum

M-06-16, "Protection of Sensitive

Agency Information"

07/13/2006

07/21/2006

07/28/2006

07/31/2006

08/16/2006

08/30/2006

08/31/2006

09/06/2006

09/21/2006

Decision

date

Final

action

07/13/2006

11/15/2006

11/17/2006

01/31/2007

03/30/2007

10/17/2006

11/17/2006

12/11/2006

11/24/2006

12/31/2009

12/31/2016

07/30/2008

09/08/2009

Note 2

11/30/2012

05/30/2008

12/31/2008

10/01/2009

Appendix 2: Tables
             

             

151

Report

number

Report title Issue

date

2006-NY-1012

2006-CH-1018

2007-KC-1001

2007-AT-1002

2007-LA-0001

2007-FO-0003

2007-LA-1003

2007-CH-1001

2007-PH-1002

2007-DP-0002

The Housing Authority of the City

of Passaic Has Allegations of

Mismanagement That Need to Be

Addressed, Passaic, NJ

Saginaw Housing Commission

Improperly Used Public Housing

Funds to Purchase Property,

Saginaw, MI

The City of St. Louis Did Not Meet

HUD's Requirements for Creating

and Retaining Jobs, St. Louis, MO

Pine State Mortgage Company Did

Not Always Comply with FHA

Underwriting and Quality Control

Requirements, Atlanta, GA

Tax Credit Project Owners Are

Allowed to Charge Higher Rents for

Tenant-Based Section 8 Voucher

Households Than Non-Voucher

Households

Additional Details to Supplement

Our Report on HUD's FY 2006

and 2005 Financial Statements

The City of Long Beach Did Not

Administer Its Continuum of Care

Supportive Housing Program in

Compliance with HUD

Requirements, Long Beach, CA

The Marion Housing Authority

Improperly Used HUD Funds for

Nonprofit Development Activities,

Marion, IN

The Montgomery County Housing

Authority Improperly Used HUD

Funds to Purchase, Renovate, and

Maintain Its Main Office,

Norristown, PA

Review of HUD's Information

Technology Services Contracts

09/22/2006

09/28/2006

10/11/2006

11/03/2006

11/08/2006

11/14/2006

12/12/2006

12/13/2006

12/13/2006

01/18/2007

Decision

date

Final

action

01/19/2007

01/19/2007

02/06/2007

03/02/2007

07/05/2007

03/07/2007

04/10/2007

04/05/2007

04/12/2007

05/25/2007

08/30/2037

12/31/2021

04/30/2008

12/31/2008

10/01/2010

Note 2

04/10/2008

07/01/2027

08/08/2008

05/15/2008

Appendix 2: Tables
             

             

152

Report

number

Report title Issue

date

2007-CH-1002

2007-DP-0003

2007-KC-0002

2007-CH-1003

2007-LA-1005

2007-DP-0004

2007-FW-1006

2007-AT-1004

2007-CH-1004

Benton Harbor Housing Commission

Did Not Effectively Manage Its Public

Housing Program and Has Not Used

Special Purpose Grant Funds It

Received More Than Nine Years

Ago, Benton Harbor, MI

Review of HUD's Procurement

Systems

HUD Can Improve Its Use of

Residual Receipts to Reduce

Housing Assistance Payments

The Housing Authority of the City

of Evansville Needs to Improve Its

Section 8 Housing Choice Voucher

Program Administration,

Evansville, IN

Oakland Housing Authority Did

Not Comply with Procurement

and Contracting Requirements,

Oakland, CA

FY 2006 Review of Information

Systems Controls in Support of

the Financial Statements Audit

Aberdeen Villa Apartments, Formerly

Asbury Square Apartments, FHA

#118-35200, Spent Almost $35,000

in Projec tFunds on Ineligible and

Unsupported Costs, Tulsa, OK

The Wilmington Housing Authority

Needs to Improve Internal Controls

over Its Program, Wilmington, NC

The Columbus Metropolitan

Housing Authority Failed to

Adequately Operate Its Section 8

Housing Choice Voucher Program,

Columbus, OH

01/25/2007

01/25/2007

01/29/2007

02/13/2007

02/14/2007

02/22/2007

03/07/2007

03/09/2007

03/15/2007

Decision

date

Final

action

05/25/2007

05/25/2007

01/29/2007

06/11/2007

06/14/2007

06/21/2007

05/22/2007

06/25/2007

05/24/2007

12/15/2008

12/31/2008

07/30/2008

12/31/2016

01/01/2009

09/30/2008

07/23/2008

06/28/2010

04/11/2008

Appendix 2: Tables
             

             

153

Report

number

Report title Issue

date

2007-BO-1003

2007-BO-1004

2007-CH-1005

2007-CH-1006

2007-AT-1005

2007-DP-0005

2007-LA-1008

2007-AT-1007

2007-KC-0003

The Office of Community

Development, City of Chicopee,

Did Not Properly Award and

Administer CDBG and HOME

Funds Used for its Housing

Activities, Chicopee, MA

Harris Health Center Did Not

Ensure That Renovations Were

Properly Completed, Paid $21,729

for Unnecessary and Nonproject

Costs, and Did Not Calculate

Management Fees Properly,

East Providence, RI

The Housing Authority of the City

of Gary Lacked Adequate Controls

over Refunding Savings, Gary, IN

Colony Mortgage Corporation,

Supervised Lender, Did Not Always

Comply with HUD's Requirements

Regarding Underwriting of Loans

and Quality Control Reviews, Fairview

Park, OH

The Puerto Rico Department of

Housing Did Not Effectively

Administer Its Section 8 Housing

Program, San Juan, PR

Review of HUD's Information

Technology Security Program

The Navajo Housing Authority

Should Discontinue Its Use of

Subgrantees for Development Projects

or Implement Additional Program

Controls, Window Rock, AZ

The Municipality of Toa Baja Needs

to Improve Its CDBG Program

Administration, Toa Baja, PR

HUD Did Not Recapture Excess

Funds from Assigned Bond-Financed

Projects

03/21/2007

03/22/2007

03/23/2007

03/26/2007

03/29/2007

04/05/2007

04/09/2007

04/11/2007

04/30/2007

Decision

date

Final

action

07/19/2007

05/24/2007

07/19/2007

09/27/2007

07/16/2007

08/03/2007

08/02/2007

07/16/2007

08/27/2007

04/21/2008

04/30/2008

12/31/2056

07/23/2008

06/30/2008

04/15/2008

06/30/2008

04/11/2008

01/31/2009

Appendix 2: Tables
             

             

154

Report

number

Report title Issue

date

2007-AO-1001

2007-FW-1009

2007-BO-0002

2007-LA-1011

2007-LA-1012

2007-SE-0001

2007-FW-1010

2007-LA-1013

The State of Mississippi's Homeowner's

Assistance Grant Program Did Not

Appropriately Calculate Grants and

Monitor the Program, Jackson, MS

Countrywide Home Loans, Inc.,

Generally Complied with HUD

Requirements in Originating

FHA-Insured Single-Family

Mortgages, Houston, TX

HUD Did Not Process Multifamily

Accelerated Processing Applications

within Established Processing Goals

and the Multifamily Accelerated

Processing Guide Is Outdated

Suburban Mortgage Company Did

Not Comply with HUD

Requirements in the Origination

of FHA-Insured Single-Family

Mortgages, Phoenix, AZ

Central City Lutheran Mission

Did Not Properly Administer Its

Supportive Housing Program

Grants, San Bernardino, CA

HUD Did Not Ensure That

Payments to Contract

Administrators Were for Work

Performed or That Interest Was

Earned on Advances and Recovered

Alethes Mortgage, LLC, and Its Dallas,

Texas, Branch, Waters Edge Mortgage,

LLC, Did No tComply with All

HUD Underwriting Requirements,

Dallas, TX

The Los Angeles Homeless Services

Authority Did Not Perform On-Site

Fiscal Monitoring of Its Project

Sponsors, Los Angeles, CA

05/07/2007

05/10/2007

05/21/2007

05/29/2007

06/04/2007

06/07/2007

06/08/2007

06/08/2007

Decision

date

Final

action

09/26/2007

08/09/2007

09/07/2007

12/31/2007

09/21/2007

10/05/2007

08/24/2007

09/28/2007

06/30/2008

05/10/2008

09/30/2008

09/30/2008

09/21/2008

10/31/2008

06/08/2008

09/28/2008

Appendix 2: Tables
             

             

155

Report

number

Report title Issue

date

2007-NY-1007

2007-CH-1008

2007-NY-1008

2007-NY-1009

2007-FW-1011

2007-FW-1012

2007-CH-1009

2007-CH-1010

2007-CH-1011

The City of Jersey City Did Not

Always Adequately Administer Its

HOME Investment Partnerships

Program, Jersey City, NJ

The Dayton Metropolitan Housing

Authority Did Not Effectively Operate

Its Section 8 Housing Choice Voucher

Program, Dayton, OH

The City of Newark Did Not Always

Administer Its CDBG Program in

Accordance with HUD Requirements,

Newark, NJ

The Town of Alexandria's Small Cities

CDBG Program Did Not Meet Its

Program Objective of Job Creation,

Alexandria, NY

Capmark Finance, Inc.,

Misrepresented Asbury Square

Apartments' Financial and Physical

Condition When Underwriting the

$9.098 Million Loan, Tulsa, OK

Fallbrook Apartments' Owner

and/or Management Agent Made

Unauthorized Distributions of the

Project's Funds, Houston, TX

The Boyne City Housing

Commission Failed to Follow

HUD's Requirements for Its

Nonprofit Development Activities,

Boyne City, MI

The Madison County Housing

Authority Did Not Effectively

Administer Its Section 8 Housing

Choice Voucher Program,

Collinsville, IL

The Indianapolis Housing Agency

Lacked Adequate Controls over

Expenses Charged to Its Section 8

Program, Indianapolis, IN

06/13/2007

06/19/2007

06/22/2007

06/29/2007

07/02/2007

07/06/2007

07/17/2007

07/20/2007

07/23/2007

Decision

date

Final

action

09/24/2007

08/24/2007

10/17/2007

10/05/2007

10/23/2007

10/10/2007

11/06/2007

11/16/2007

11/19/2007

09/12/2008

05/15/2008

10/17/2008

06/30/2008

10/29/2008

12/31/2008

10/31/2017

05/31/2008

01/31/2025

Appendix 2: Tables
             

             

156

Report

number

Report title Issue

date

2007-PH-1009

2007-BO-1006

2007-PH-1010

2007-LA-1014

2007-CH-1012

2007-DE-1006

2007-AT-1010

2007-PH-1011

2007-NY-1011

The Newport News Redevelopment

and Housing Authority Did Not

Effectively Operate Its Housing

Choice Voucher Program,

Newport News, VA

Multifamily Project Deficiencies

Resulted in More Than $730,000

in Cost Exceptions for Moosup

Gardens Apartments, Moosup, CT

Countrywide Home Loans Generally

Complied with HUD Requirements

in Originating FHA-Insured

Single-Family Loans, Plymouth

Meeting, PA

The Housing Authority of the

County of San Mateo Did Not Use

HUD Program Funds in Accordance

with HUD Requirements, San

Mateo, CA

The Plymouth Housing Commission

Needs to Improve Its Section 8

Housing Choice Voucher Program

Administration, Plymouth, MI

The State of Utah Did Not Comply

with HOME Investment Partnerships

Program Requirements, Salt Lake

City, UT

The Cathedral Foundation of

Jacksonville Used More Than $2.65

Million in Project Funds for Questioned

Costs, Jacksonville, FL

The Housing Commission of Anne

Arundel County Did Not Always

Operate Its Housing Choice Voucher

Program in Accordance with Federal

Requirements, Glen Burnie, MD

The Hoboken Housing Authority

Requires Improved Controls over

Its Capital Fund Program and Cash

Disbursement Process, Hoboken, NJ

07/24/2007

07/25/2007

07/26/2007

07/27/2007

08/03/2007

08/10/2007

08/14/2007

08/14/2007

08/17/2007

Decision

date

Final

action

11/13/2007

11/20/2007

10/16/2007

11/23/2007

11/23/2007

10/19/2007

12/03/2007

12/11/2007

12/11/2007

07/31/2008

02/27/2009

07/31/2008

11/24/2017

11/30/2008

10/01/2008

12/31/2008

06/30/2008

06/30/2008

Appendix 2: Tables
             

             

157

Report

number

Report title Issue

date

2007-PH-0002

2007-PH-1012

2007-DP-0006

2007-BO-1008

2007-LA-1015

2007-NY-1012

2007-AT-0001

2007-DP-0007

2007-LA-1016

2007-CH-1014

HUD's Oversight of Contractors'

Marketing of Its Real Estate-Owned

Properties

The State of Maryland Did Not

Always Administer Its Homeownership

Assistance Program in Accordance

with Federal Regulations and Written

Agreements, Crownsville, MD

Review of HUD's Personal Identity

Verification and Privacy Program

Holyoke Housing Authority Needs to

Improve Its Internal Controls over

the Voucher Program, Cost Allocations

and Transfers, Holyoke, MA

The Housing Authority of the City

of North Las Vegas Significantly

Underleased Its Section 8 Housing

Choice Voucher Program, North

Las Vegas, NV

The City of Passaic's Community

Development Department Has

Weaknesses in Its HOME Investment

Partnerships Program, Passaic, NJ

HUD Needs to Improve Controls

over Its Contract Administration

Processes

Vulnerability Assessment of HUD's

Computer Network

A Community of Friends Did Not

Always Administer Its Cash Match

in Compliance with HUD

Requirements, Los Angeles, CA

The Peoria Housing Authority Did

Not Effectively Administer Its Section

8 Housing Choice Voucher Program,

Peoria, IL

08/17/2007

08/27/2007

08/28/2007

08/29/2007

09/04/2007

09/12/2007

09/19/2007

09/19/2007

09/21/2007

09/24/2007

Decision

date

Final

action

12/12/2007

12/19/2007

12/20/2007

12/31/2007

11/07/2007

12/17/2007

09/19/2007

01/28/2008

01/18/2008

01/14/2008

12/31/2008

04/30/2008

04/30/2009

06/30/2008

04/30/2008

12/12/2008

09/30/2009

08/31/2008

01/17/2009

05/31/2008

Appendix 2: Tables
             

             

158

Report

number

Report title Issue

date

2007-KC-0004

2007-KC-0801

2007-AT-1011

2007-CH-1015

2007-PH-1013

2007-CH-1016

2007-FW-0001

2007-CH-0001

2007-CH-1017

More Than 80 Percent of Recently

Insured Title II Manufactured

Housing Loans Are on Homes

with Substandard Foundations

Lenders Submitted Title II

Manufactured Housing Loans for

Endorsement without the Required

Foundation Certifications

The Wilmington Housing Authority

Did Not Follow HUD Requirements

for Its Nonprofit Development

Activities, Wilmington, NC

Cook County Lacked Adequate

Controls over Its HOME Investment

Partnerships Program, Chicago, IL

The Harrisburg Housing Authority

Did Not Properly Administer Its

Low-Rent Public Housing Program,

Harrisburg, PA

The Plymouth Housing Commission

Failed to Adequately Administer Its

Section 8 Housing Choice Voucher

Program, Plymouth, MI

Overpayments in the Housing

Choice Voucher Program Occurred

When Public Housing Agencies

Subsidized Rental Units with More

Bedrooms Than Authorized

HUD Did Not Fully Implement

Succession Planning

The City of Cincinnati Lacked

Adequate Controls over Its HOME

Investment Partnerships Program,

Cincinnati, OH

09/24/2007

09/24/2007

09/26/2007

09/26/2007

09/27/2007

09/28/2007

09/28/2007

09/29/2007

09/30/2007

Decision

date

Final

action

03/28/2008

03/11/2008

01/24/2008

01/24/2008

11/28/2007

01/24/2008

01/24/2008

10/26/2007

01/28/2008

11/30/2008

03/07/2009

01/01/2011

09/30/2008

12/31/2024

01/24/2009

12/31/2008

04/28/2008

09/30/2008

Appendix 2: Tables
             

             

159

Report

number

Report title Issue

date

2007-CH-1018

2007-SE-1004

The City of Milwaukee Needs to

Improve Existing Controls over Its

HOME Program Regarding

Housing Conditions and

Contracting, Milwaukee, WI

The Tacoma Consortium Did Not

Properly Administer Its HOME

Investment Partnerships Grants,

Tacoma, WA

09/30/2007

09/30/2007

Decision

date

Final

action

03/20/2008

01/25/2008

10/30/2009

09/30/2008

Appendix 2: Tables



Audits excluded

44 audits under repayment plans

33 audits under formal judicial review,

investigation, or legislative solution

Notes

1 Management did not meet the target date.

Target date is over 1 year old.

2 Management did not meet the target date.

Target date is under 1 year old.

3 No management decision
             

             

160

Table C

Inspector general-issued reports with questioned and

unsupported costs at March 31, 2008

(Thousands)

Audit reports Number of

audit reports

Unsupported

costs

For which no management decision had been made

by the commencement of the reporting period

For which litigation, legislation, or investigation was

pending at the commencement of the reporting

period

For which additional costs were added to reports in

beginning inventory

For which costs were added to noncost reports

Which were issued during the reporting period

Which were reopened during the reporting period

Subtotals (A+B)

20,332

17,230

2,597

0

85,108

0

125,267

Questiones

costs

41,352

29,630

4,705

0

139,076

0

214,763

35

11

-

0

44

0

90

A1

A2

A3

A4

B1

B2

For which a management decision was made during

the reporting period

(1) Dollar value of disallowed costs:

 - Due HUD

 - Due program participants

(2) Dollar value of costs not disallowed

For which management decision had been made not

to determine costs until completion of litigation,

legislation, or investigation

For which no management decision had made by

the end of the reporting period

33,712

9,084

22,791

1,837

14,768

76,787

<76,573>4

67,696

19,115

45,157

3,424

21,423

125,644

<125,379>4

541

142

42

133

8

28

<74>4

C

D

E

1

 37 audit reports also contain recommendations with funds to be put to better use.

2

 3 audit reports also contain recommendations with funds due program participants.

3

 12 audit reports also contain recommendations with funds agreed to by management.

4

 The figures in brackets represent data at the recommendation level as compared to the report level.

 See explanations of tables C and D.

Appendix 2: Tables
             

             

161

Table D

Inspector general-issued reports with recommendations

that funds be put to better use at March 31, 2008

(Thousands)

Audit reports Number of

audit reports

Dollar

value

For which no management decision had been made by the

commencement of the reporting period

For which litigation, legislation, or investigation was

pending at the commencement of the reporting period

For which additional costs were added to reports in

beginning inventory

For which costs were added to noncost reports

Which were issued during the reporting period

Which were reopened during the reporting period

Subtotals (A+B)

333,233

90,852

507

0

1,221,312

0

1,645,904

30

9

-

0

35

0

74

A1

A2

A3

A4

B1

B2

For which a management decision was made during the

reporting period

(1) Dollar value of disallowed costs:

- Due HUD

- Due program participants

(2) Dollar value of costs not disallowed

For which management decision had been made not to

determine costs until completion of litigation, legislation,

or investigation

For which no management decision had made by the end

of the reporting period

156,783

54,599

101,252

932

87,487

1,401,634

<1,059,180>3

451

11

33

42

8

21

<27>3

C

D

E

1

 37 audit reports also contain recommendations with questioned costs.

2

 3 audit reports also contain recommendations with funds agreed to by management.

3

 The figures in brackets represent data at the recommendation level as compared to the report level.

 See explanations of tables C and D.

Appendix 2: Tables
             

             

162

Explanations of tables C and D

Appendix 2: Tables

The Inspector General Act Amendments of 1988 require Inspectors General and agency heads to report

cost data on management decisions and final actions on audit reports. The current method of reporting at the

"report" level rather than at the individual audit "recommendation" level results in misleading reporting of

cost data. Under the Act, an audit "report" does not have a management decision or final action until all

questioned cost items or other recommendations have a management decision or final action. Under these

circumstances, the use of the "report" based rather than the "recommendation" based method of reporting

distorts the actual agency efforts to resolve and complete action on audit recommendations. For example,

certain cost items or recommendations could have a management decision and repayment (final action) in a

short period of time. Other cost items or nonmonetary recommendation issues in the same audit report may

be more complex, requiring a longer period of time for management's decision or final action. Although

management may have taken timely action on all but one of many recommendations in an audit report, the

current "all or nothing" reporting format does not take recognition of their efforts.

The closing inventory for items with no management decision in tables C and D (line E) reflects figures at

the report level as well as the recommendation level.


               

               

Appendix 3

Index
             

             

164

State Page numbers

Alaska 80

Alabama 43

Arizona 18, 37, 101

California 13, 15, 17, 18, 24, 26, 30, 40, 41, 42, 46, 49, 50, 51, 52, 53, 59, 61, 64,

65, 66, 75, 76, 102, 103, 118, 121, 124

Colorado 15, 16, 18, 27, 32, 117, 122

Connecticut 35, 60, 119, 123

District of Columbia 9, 19, 27, 53, 71, 94, 108, 109, 120, 125, 130

Florida 25, 35, 37, 39, 43, 65, 71, 72, 73, 82, 84, 121

Georgia 18, 32, 36, 54, 75

Idaho 132

Illinois 15, 16, 17, 18, 19, 36, 38, 42, 48, 116, 117, 118, 120, 122, 124, 125,

126

Indiana 28, 53, 80, 103

Kansas 45, 49, 66, 67

Kentucky 37

Louisiana 14, 24, 38, 54, 89, 94, 95, 97, 98, 102, 103, 104

Maine 36, 47, 53, 123

Maryland 19, 31, 43, 45, 47, 48, 82

Massachusetts 25, 35, 40, 43, 44, 46, 47, 65, 66, 72, 84, 123

Michigan 29, 45, 117, 124, 125, 126

Minneapolis 104, 119, 122

Mississippi 80, 89, 98, 99, 100, 101, 102, 103, 104, 105

Missouri 38, 53, 54, 121, 123, 126

Montana 47, 55

Nebraska 28, 31, 44, 119

Nevada 39, 50, 55, 117, 118, 119

New Hampshire 80, 123

New Jersey 13, 14, 17, 38, 52, 55, 56, 82, 83, 84, 119

New Mexico 36

New York 15, 16, 37, 40, 41, 42, 46, 50, 51, 60, 64, 65, 66, 73, 74, 81, 84, 116,

118, 119, 121, 124, 125

North Carolina 48, 49, 53, 120

Ohio 14, 30, 39, 40, 47, 64, 111, 122

Appendix 3: Index
             

             

Appendix 3: Index 165

State Page numbers

Oklahoma 30, 48

Oregon 33

Pennsylvania 10, 14, 25, 35, 36, 41, 61, 66, 120, 121, 131

Puerto Rico 25, 50, 72

Rhode Island 124

South Carolina 117

Tennessee 47, 83

Texas 13, 15, 17, 18, 23, 29, 45, 51, 54, 59, 77, 81, 83, 101, 104, 118, 125

Utah 17, 37, 51, 55, 122

Virginia 45, 46, 48, 80, 85, 118, 120

Washington 46, 49, 120

Wisconsin 32, 116, 118


               

               

HUD OIG

Operations

Telephone Listing
             

             

168

Office of Audit

Headquarters Office of Audit, Washington, DC 202-708-0364

Region 1 Boston, MA 617-994-8380

Hartford, CT 860-240-4800

Region2 New York, NY 212-264-4174

Albany, NY 518-464-4200

Buffalo, NY 716-551-5755

Newark, NJ 973-622-7900

Region 3 Philadelphia, PA 215-656-0500

Baltimore, MD 410-962-2520

Pittsburgh, PA 412-644-6372

Richmond, VA 804-771-2100

Region 4 Atlanta, GA 404-331-3369

Miami, FL 305-536-5387

Greensboro, NC 336-547-4001

Jacksonville, FL 904-232-1226

Knoxville, TN 865-545-4369

San Juan, PR 787-766-5202

Region 5 Chicago, IL 312-353-7832

Columbus, OH 614-469-5745

Detroit, MI 313-226-6190

Region 6 Fort Worth, TX 817-978-9309

Houston, TX 713-718-3199

Oklahoma City, OK 405-609-8606

San Antonio, TX 210-475-6898

Regions 7/8 Kansas City, KS 913-551-5870

St. Louis, MO 314-539-6339

Denver, CO 303-672-5452

Regions 9/10 Los Angeles, CA 213-894-8016

Phoenix, AZ 602-379-7250

San Francisco, CA 415-489-6400

Seattle, WA 206-220-5360

Gulf Coast Region New Orleans, LA 504-671-3715

Jackson, MS 601-965-4700

HUD OIG Operations Telephone Listing
             

             

HUD OIG Operations Telephone Listing 169

Office of Investigation

Headquarters Office of Investigation, Washington, DC 202-708-0390

Region 1 Boston, MA 617-994-8450

Hartford, CT 860-240-4800

Manchester, NH 603-666-7988

Region 2 New York, NY 212-264-8062

Buffalo, NY 716-551-5755

Newark, NJ 973-776-7347

Region 3 Philadelphia, PA 215-656-0500

Baltimore, MD 410-962-4502

Pittsburgh, PA 412-644-6598

Richmond, VA 804-771-2100

Region 4 Atlanta, GA 404-331-3359

Miami, FL 305-536-3087

Greensboro, NC 336-547-4000

Knoxville, TN 865-545-4000

San Juan, PR 787-766-5868

Tampa, FL 813-228-2026

Region 5 Chicago, IL 312-353-4196

Cleveland, OH 216-522-4421

Columbus, OH 614-469-6677

Detroit, MI 313-226-6280

Indianapolis, IN 317-226-5427

Minneapolis-St. Paul, MN 612-370-3130

Region 6 Arlington, TX 817-978-5440

Houston, TX 713-718-3196

Oklahoma City, OK 405-609-8601

San Antonio, TX 210-475-6819

Region 7/8 Kansas City, KS 913-551-5866

St. Louis, MO 314-539-6559

Denver, CO 303-672-5350

Billings, MT 406-247-4080

Salt Lake City, UT 801-524-6090

Region 9/10 Los Angeles, CA 213-894-0219

San Francisco, CA 415-489-6683

Phoenix, AZ 602-379-7255

Sacramento, CA 916-930-5691

Las Vegas, NV 702-366-2144

Seattle, WA 206-220-5380
             

             

170

Gulf Coast Region New Orleans, LA 504-671-3701

Arlington, TX 817-978-5440

Baton Rouge, LA 225-334-4913

Hattiesburg, MS 601-299-4279

Houston, TX 713-718-3196

Jackson, MS 601-965-5772

Washington, DC 202-708-0390

HUD OIG Operations Telephone Listing


Report fraud, waste, and mismanagement in HUD

programs and operations by

Calling the OIG Hotline: 1-800-347-3735

Faxing the OIG Hotline: 202-708-4829

Sending written information to:

Department of Housing and Urban Development

Inspector General Hotline (GFI)

451 7th Street, SW

Washington, DC 20410

E-mailing the OIG Hotline: hotline@hudoig.gov

Internet:http://www.hud.gov/complaints/fraud_waste.cfm

All information is confidential,

and you may remain anonymous.
               

               

This Semiannual Report to Congress is dedicated to the brave men and

women of the armed forces. We especially honor those who have been

wounded and pay tribute to those who have paid the ultimate price to

defend our country.

Semiannual Report to Congress

October 1, 2007, through March 31, 2008

www.hud.gov/offices/oig

No. 59 HUD-2008-01-OIG